Crisis in energy markets caused by the conflict in the Middle East “will not be short-lived”. EU recommends that European countries implement “voluntary savings measures”.
European Energy Commissioner Dan Jorgensen called on European Union (EU) Member States on Tuesday to prepare for prolonged disruptions in energy supply chains and begin implementing measures to save fuelat a time when the worsening war in Iran continues to put pressure on oil and gas markets.
In a letter sent to the bloc’s 27 member states, Jorgensen encouraged the adoption of a ten point plan prepared by the International Energy Agency (IEA), which includes incentives such as:
- teleworking
- car sharing and use of public transport
- reducing the speed limit on motorways
- measures to favor the use of electricity instead of gas for cooking
- reduction in air travel
The IEA plan was originally drawn up in 2022, at the start of the war in Ukraine, which also caused disruption in the global energy market. Now, Jorgensen’s appeal comes as energy ministers from EU member states consider how to respond to a daily global shortage of 11 million barrels of oil and more than 300 million cubic meters of liquefied natural gas (LNG), caused by the war in Iran.
Since the beginning of the conflict in the Middle East, EU prices rose by around 70% for gas and 60% for oil. In 30 days of conflict, this increase has already added 14 billion euros to the EU’s fossil fuel import costs.
“We must not deceive ourselves: the consequences of this crisis for energy markets will not be short-lived. Because they won’t be”Jorgensen said this week.
“This crisis demonstrates, once again, that Europe faces a fundamental vulnerability to external energetic shocks. And this is linked to our dependence on imported fossil fuels”, he highlighted.
For now, European countries have not yet adopted measures to reduce demand nor are they considering drastic measures similar to those taken during the , when governments imposed gasoline rationing and days without private vehicle circulation.
In the same letter, the European Commissioner recommended that Member States postpone the maintenance of oil refineries to maintain production and prepare to ensure adequate gas storage for next winter.
Shortage risk
Jorgensen also stated that the European transport sector is facing rising costs and supply shortages due to the sector’s heavy dependence on the Persian Gulf, on which the EU depends for more than 40% of its aviation kerosene and diesel imports. It added that the risk of shortages is compounded by the “limited availability of alternative suppliers and refining capacity for specific products within the EU”.
“A security of supply to the European Union remains guaranteed. But we must be prepared for a possible prolonged disruption of international energy trade,” Jorgensen said on Tuesday, ahead of a virtual meeting of EU energy ministers.
“That’s why we need to act now and together,” he added. “Only by working together can we be stronger and protect our citizens and businesses more effectively.”
The European Commissioner’s warnings come at a time of growing fears that the war launched by the US and Israel against Iran could extend further, making it more likely risk of long-term supply shortages.
So far, the conflict has seen Brent crude oil soar, at one point, to $119 per barrel, well above $70 before the war, and some analysts have warned that prices could rise to as much as $200 as the conflict worsens. This Thursday, 107 dollars.
This Wednesday, the executive director of the IEA said that oil supply problems arising from the war they will worsen in April and affect Europe.
The warning comes even after the 32 members of the IEA released 400 million barrels of oil from their strategic reserves, in the largest release of stocks in the organization’s history.
This week, Germany’s Federal Chancellor Friedrich Merz warned that The effects of the war could hit Europe in a similar way to what happened during the covid-19 pandemic, in 2020 and 2021.
