- Recently, IEA has made some observations about the impact of global lockdown on oil demands across the world.
- The price of oil has already fallen about 60% since the start of the year due to a pricing war between Saudi Arabia and Russia.
- Global demand for oil will fall this year by the most ever due to the economic lockdowns enforced around the world to contain the coronavirus pandemic.
- An estimated drop in demand of 9.3 million barrels a day this year is equivalent to a decade’s worth of Growth.
- It is established in 1974 as per framework of the OECD, which is an autonomous intergovernmental organisation.
- Its Headquarters (Secretariat) is located at Paris, France.
- Its mission is to ensure reliable, affordable and clean energy for its member countries and beyond. They are guided by four main areas of focus: energy security, economic development, environmental awareness and engagement worldwide.
- It mandate has expanded over time to include tracking and analyzing global key energy trends, promoting sound energy policy, and fostering multinational energy technology cooperation.
- The Reports released by IEA are Global Energy & CO2 Status Report, World Energy Outlook, World Energy Statistics, World Energy Balances and Energy Technology Perspectives.
Composition and Eligibility:
- It has 30 members at present. Its family also includes eight association countries.
- A candidate country must be a member country of the OECD. But all OECD members are not IEA members.
- To become its member country, they must demonstrate that it has:
- Crude oil and/or product reserves equivalent to 90 days of the previous year’s net imports, to which the government has immediate access (even if it does not own them directly) and could be used to address disruptions to global oil supply.
- A demand restraint programme to reduce national oil consumption by up to 10%.
- Legislation and organisation to operate the Co-ordinated Emergency Response Measures (CERM) on a national basis.
- Legislation and measures to ensure that all oil companies under its jurisdiction report information upon request.
- Measures in place to ensure the capability of contributing its share of an IEA collective action.
About the Impact and their Changes:
- While the cheaper energy can be helpful for consumers and energy-hungry businesses, it is below the cost of production.
- That is eating away at the state finances of oil-producing countries, many of whom are relatively poor economies, and pushing companies to bankruptcy.
- With broad limits on travel and business, many consumers are unable to take advantage of the low prices anyway.
- The recent deal by OPEC and other countries to reduce global output by some 9.7 million barrels a day will help stabilize the situation somewhat.
On top of those cuts, countries like China, India, South Korea and the United States will look to buy more oil to store away in strategic reserves