Europe has ‘maybe 6 weeks of jet fuel left’, energy boss warns

The International Energy Agency (IEA) has raised concerns that Europe may face a critical shortage of jet fuel, with its executive director suggesting the continent could exhaust its reserves within six weeks. This warning comes as the IEA highlighted in its latest report that if Europe cannot secure at least half of its Middle Eastern imports, supply stocks might reach a breaking point by June.

A pivotal factor in this crisis is the closure of the Strait of Hormuz, a vital artery for Gulf crude oil exports. Iran’s blockade of this passage, lasting over six weeks, has disrupted fuel flows and driven prices to unprecedented levels. IEA chief Fatih Birol warned that flight cancellations could occur if the supply blockage persists, emphasizing the strain on aviation markets.

Jet fuel imports from the Middle East typically supply 75% of Europe’s needs, according to the IEA. While countries are rushing to find alternative sources, the agency noted that even a surge in US exports would only cover a little over half of the shortfall. In the worst-case scenario, where replacements fall short of 50%, “physical shortages may emerge at select airports, resulting in flight cancellations, and demand destruction,” the report stated.

Global airlines have also felt the pinch of rising fuel costs, which account for 20-40% of their operating expenses. The European jet fuel benchmark surged to $1,838 per tonne in early April, compared to $831 before the conflict. Despite this, the European Commission claimed “no evidence of fuel shortages” in the bloc, though it admitted potential supply issues could materialize “in the near future.”

The Commission noted that crude oil deliveries to EU refineries remain stable, with no immediate need for extra stock releases. However, coordination groups are convening weekly to address the situation. A spokesperson stated, “crude oil supplies to EU refineries were ‘stable with no need for additional stock releases at present.'” The president of the Commission is set to announce further energy measures next week.

European airports, represented by the Airports Council International, urged the Commission to act swiftly, warning that a prolonged Hormuz closure could lead to shortages. EasyJet, a major airline, revealed that its fuel costs rose by £25m in March due to the Middle East conflict. The company had hedged three-quarters of its fuel supply beforehand, yet the situation has introduced “near-term uncertainty around fuel costs and customer demand.”

“Physical shortages may emerge at select airports, resulting in flight cancellations, and demand destruction.”

Additional reporting by Oliver Smith.