IEA outlines plan to avert new ‘oil shock’

PARIS: The International Energy Agency on Friday unveiled measures to reduce oil consumption quickly in the face of the risks of a “shock” due to the Russian invasion of Ukraine, including lowering speed limits on roads, working remotely and making public transport less cost.

The agency said that these ten proposals could reduce consumption in advanced economies “by 2.7 million barrels per day over the next four months.”

It previously presented a plan to reduce dependence on Russian gas and now focuses on oil, of which Russia is the first global exporter and the second for crude after Saudi Arabia.

Presenting the plan, Executive Director of the International Energy Agency Fatih Birol stressed that “as a result of Russia’s terrible aggression against Ukraine, the world may face the largest shock to oil supplies in decades.”

Part of Russian production will no longer be available on international markets, whether because of sanctions (such as those imposed by the United States) or because of a boycott of companies voluntarily moving away from Russia.

The developed countries that are members of the International Energy Agency, which was established in 1974 after the oil shock, have already used their strategic reserves, and the corporation issued a Friday call to the producing countries to make greater efforts to supply the market.

The outbreak of the war in Ukraine sent fuel prices skyrocketing and prompted major economies such as the United States and Canada to impose sanctions on Russia by banning oil imports.

In light of the threat that Russian oil supplies may decrease further, “there is a real risk that the markets may contract further and oil prices will rise significantly in the coming months” at a time when the world is entering the peak demand season, according to the agency.

Thus, Fatih Birol expressed his hope that the next meeting of OPEC + (which includes the members of the cartel and their allies, including Russia – at the end of the month will allow “relieving pressure on the market” and asked the oil-producing countries to be on the “right side”.

He added, “We can also move with regard to demand,” while revealing the measures to save oil, which focus on the transportation sector.

He suggested reducing the speed limit on highways by at least 10 km per hour, and working from home up to three days a week if possible, or even organizing Sundays without cars in cities.

These measures not only improve the supply situation, but also reduce greenhouse gas emissions and air pollution while cutting spending.

Oil prices rose a lot following the invasion of Ukraine, which led to a significant increase in fuel prices and support measures for motorists and professionals in some countries.

On the other hand, the IEA’s plan has the advantage that it can be implemented quickly, by summer. Because peak demand with the start of the summer holidays in July and August in the northern half of the world is “approaching”, Fatih Birol added. (AFP)