War Effects! Oil Market Experiences the Largest Disruption in History

Jakarta, CNBC Indonesia — The International Energy Agency (IEA) warned on Friday that supply regulation policies alone will not suffice to reduce global oil supply disruptions amid escalating conflicts in the Middle East.

The global oil market disruption, which began with the US-Israel attacks on Iran, is described as the largest in the history of the global oil market.

Rather than waiting for disrupted production to recover, reducing oil demand can alleviate pressure on consumers and help lower prices more quickly.

Citing CNBC, the IEA stated that reducing land and air transport, working from home where possible, and switching to electric stoves can significantly help mitigate the impact of the shock on consumers.

Rising geopolitical risks have shaken traders, not only driving up crude oil prices but also increasing costs for refined products like diesel and jet fuel, which directly affect transportation, logistics, and consumer prices.

Oil prices have surged more than 40% since the US-Iran war began on 28 February, reaching levels not seen since 2022. This is due to severely disrupted supplies, largely because of the effective closure of the Strait of Hormuz.

This strait is a narrow maritime corridor off the coast of Iran that connects the Persian Gulf and the Gulf of Oman and typically carries about one-fifth of global oil consumption.

As a result, countries are tapping into strategic oil reserves, with hundreds of millions of barrels scheduled for release.

The IEA agreed last week to release 400 million barrels of oil to address supply disruptions triggered by the Iran war. This marks the largest action in the organisation’s history. However, the IEA has not provided a schedule for when those stocks will enter the market.

Reducing Oil Demand

Although policymakers continue to manage supply disruptions, coordinated efforts to reduce consumption could provide the fastest relief.

“Tackling demand is an important and immediate tool to reduce pressure on consumers by improving affordability and supporting energy security,” the IEA said on Friday, cited from CNBC, Sunday (22/3/2026).

The IEA outlined various steps that households and businesses can take to reduce demand.

Among the most impactful measures are encouraging remote work where possible, increasing carpooling and public transport use, and reducing non-essential air travel.

These measures primarily focus on land transport, which accounts for about 45% of global oil demand.

The agency noted that working from home where possible reduces fuel demand for commutes, while lowering speed limits, switching from private cars to public transport, and alternating private vehicle access in cities can further reduce congestion and fuel consumption.

Measures to redirect the use of liquefied petroleum gas (LPG) from transport to more essential uses like cooking can also help keep prices low. The same applies to adopting alternative clean cooking solutions that reduce reliance on LPG.

Taxes

Countries are also considering fiscal measures to ease pressure on consumers and prevent sharp fuel price hikes that could add to inflationary pressures.

Spain plans to reduce value-added tax (VAT) on fuel to 10% from 21%, according to local media reports citing sources familiar with the matter. According to the report, the government will also eliminate the 5% tax on electricity.

Italy cut fuel excise duties on Wednesday, while Germany’s finance ministry said it is seeking ways to protect consumers from rising fuel prices, such as introducing a windfall profits tax on oil companies.

On Friday morning, the international Brent crude futures price for May delivery rose 1.3% to US$109.93 per barrel, while the US West Texas Intermediate crude futures price for April delivery was largely stable at US$96.20.