European Commissioner Dan Jørgensen has called on the governments of EU member states to take urgent measures to limit the use of oil and gas, especially in the transport sector, amid increasing supply pressures due to the conflict in the Strait of Hormuz. This request was made in a letter dated March 30, where he asked energy ministers to report on current market capacity and propose practical measures to reduce demand.
This call comes at a time when ministers are meeting in an emergency session to discuss a global shortfall of up to 11 million barrels of oil per day and over 300 million cubic meters of liquefied natural gas per day. Energy and finance ministers from the Group of Seven have expressed their close monitoring of the conflict's impact on energy and overall economic stability, affirming their readiness to take "any necessary measures" to ensure market security.
Details of the Situation
Despite not reaching an agreement on concrete steps such as releasing strategic reserves, discussions are paving the way for today's EU assessment. Jørgensen noted that rising prices are making transport more expensive, urging European capitals to coordinate to maintain the availability of diesel and jet fuel at reasonable prices.
While oil supplies appear manageable at present, concerns are growing regarding diesel and jet fuel, as Europe heavily relies on imports from Saudi Arabia and Kuwait. Data indicates that approximately 20% of the diesel consumed in the EU and the UK comes from the Gulf region, raising concerns about dependence on these sources.
Background & Context
This situation reflects the increasing European reliance on energy supplies from the Gulf region, which the EU considers a significant concern. The European Commission has expressed worry over dependence on this region to meet diesel and jet fuel needs, along with the limited alternative suppliers and insufficient refining capacity within the bloc.
The letter reviewed by Euronews recommends postponing maintenance of oil refineries to sustain production and suggests considering the use of biofuels as an alternative. Data from S&P Global Commodities at Sea shows that Europe’s imports of jet fuel and kerosene fell to 1.064 million metric tons in March, down from 1.111 million in February.
Impact & Consequences
Aviation sources in Europe warn that the continuation of the current situation could lead to flight cancellations during the summer, causing a significant crisis in the air transport sector. European governments have also been warned of the necessity to ensure adequate gas storage for the upcoming winter without causing price hikes or market disruptions.
Jørgensen pointed out that the effective closure of the Strait of Hormuz, a vital route for about 25-30% of global oil and 20% of liquefied natural gas, places significant pressure on international markets. However, the Commissioner affirmed that the EU's immediate energy supplies "remain constrained," urging capitals to "make timely preparations" in anticipation of potential long-term disruptions.
Regional Significance
The Arab region is directly affected by these developments, as any increase in oil or gas prices could impact the economies of oil-producing Arab countries. Additionally, regional conflicts, such as the situation in Iran, exacerbate instability in energy markets, potentially worsening economic conditions in Arab nations.
In conclusion, the current situation requires high-level coordination between European and Arab countries to ensure energy market stability and avoid future crises.