Introduction: The 2024 Conflict and Renewed Energy Crisis

The ongoing geopolitical conflict in 2024, involving key energy-producing regions, has triggered a sharp surge in global oil prices, drawing immediate comparisons with the 1973 oil crisis. The 1973 crisis, initiated by the Arab oil embargo, quadrupled oil prices and exposed vulnerabilities in global energy supply chains. Similarly, the current conflict has pushed oil prices from approximately $20 per barrel pre-conflict to over $100 per barrel as per the International Energy Agency (IEA) June 2024 report. This price shock has reignited concerns about energy security, supply dependencies, and economic stability worldwide.

Legal and Institutional Framework Governing Energy Security

India’s domestic legal framework for energy security includes the Petroleum and Natural Gas Regulatory Board Act, 2006 (PNGRB Act), which regulates the oil and gas sector, and the Essential Commodities Act, 1955 (Section 3), empowering the government to control oil supplies during emergencies. Internationally, the International Energy Agency (IEA) was established post-1973 crisis to coordinate emergency oil stockpiling and demand management among OECD countries. However, the current crisis exposes the limitations of this framework, as major energy consumers like China and India are non-IEA members, leading to a fragmented global response.

• PNGRB Act, 2006: Regulates pipelines, storage, and distribution of petroleum products in India.
• Essential Commodities Act, 1955: Allows government intervention to ensure equitable distribution during supply shocks.
• IEA Framework: Coordinates strategic petroleum reserves and emergency response among member countries.
• OPEC influences supply and pricing but lacks enforcement mechanisms over non-member consumers.

Economic Impact: Price Volatility and Inflationary Pressures

The 2024 conflict has caused oil prices to surge from $20 to over $100 per barrel, a fivefold increase reminiscent of the 1973 crisis. This has inflated India’s crude oil import bill by 35% to $180 billion in FY2023-24, per the Ministry of Commerce. Oil constitutes nearly 30% of India’s total import expenditure, significantly straining the fiscal deficit and widening the current account deficit. Globally, the International Monetary Fund (IMF) downgraded GDP growth projections by 0.5% due to energy price shocks, while inflation rose by 4.5% in 2024, partly driven by rising energy costs.

• Oil price increase: $20/barrel (pre-conflict) to $100+/barrel (2024) – IEA, June 2024
• India’s crude oil import bill: $180 billion in FY2023-24, up 35% – Ministry of Commerce, India
• Oil share in India’s imports: ~30% – Economic Survey 2023-24
• Global inflation: 4.5% in 2024, partly energy-driven – IMF WEO, April 2024
• Global GDP growth downgraded by 0.5% due to energy shocks – IMF WEO, April 2024

Comparative Analysis: 1973 Crisis vs. 2024 Conflict

The 1973 oil crisis led to the formation of the IEA by OECD countries to coordinate strategic petroleum reserves and demand management, creating a unified emergency response mechanism. In contrast, the 2024 conflict has seen a fragmented global response. Non-IEA countries like China and India have pursued diversified energy sourcing and accelerated renewable energy investments, with renewable capacity additions increasing by 15% in 2023 compared to negligible levels in the 1970s (IEA Renewable Energy Report, 2024). This diversification contrasts with the 1973 era’s heavy reliance on fossil fuels.

Critical Policy Gaps in Global Energy Security

The current crisis reveals the absence of a unified global mechanism for equitable energy resource distribution during emergencies. Unlike the post-1973 period, where IEA members coordinated stockpiling and demand restraint, many countries today rely heavily on volatile fossil fuel imports without adequate strategic reserves. India, despite regulatory frameworks, faces challenges in balancing import dependence and price volatility. The lack of enforceable multilateral frameworks for energy cooperation among major consumers and producers exacerbates supply insecurities.

• Non-universal membership of IEA limits coordinated response.
• Insufficient strategic petroleum reserves in many emerging economies.
• Heavy dependence on fossil fuels without rapid transition to renewables.
• Geopolitical rivalries hinder collective energy diplomacy.

Way Forward: Enhancing Energy Security Post-2024 Conflict

Addressing vulnerabilities requires expanding global cooperation beyond IEA membership to include major non-OECD consumers like India and China. Strengthening strategic petroleum reserves, improving supply chain resilience, and accelerating renewable energy adoption are critical. India’s policy instruments like the PNGRB Act and Essential Commodities Act must be leveraged to stabilize domestic markets. Additionally, multilateral frameworks should incentivize equitable energy resource sharing and coordinated demand management during crises.

• Expand IEA-like coordination to include emerging economies.
• Increase strategic petroleum reserves to cover at least 90 days of net imports (current IEA standard).
• Accelerate renewable energy capacity additions to reduce fossil fuel dependence.
• Enhance diplomatic engagement to mitigate geopolitical risks to energy supply.

Jharkhand & JPSC Relevance

• JPSC Paper: Paper 2 (International Relations), Paper 3 (Economy)
• Jharkhand Angle: Jharkhand’s coal and mineral resources contribute to India’s energy mix; disruptions in global energy markets impact local industries and employment.
• Mains Pointer: Frame answers by linking global energy shocks to state-level economic impacts and policy responses, highlighting Jharkhand’s strategic role in India’s energy security.