The union is facing an energy problem due to the closure of the Strait of Hormuz, while the price of diesel has risen and caused protests.
The EU is entering an oil crisis caused by a global supply shock caused by the US-Israeli attack on Iran. It has already sparked protests, early signs of shortages, and warnings of a major economic impact.
This is due to the interruption of the Strait of Hormuz, an important route for the transportation of energy in the world. Oil prices rose above $120 a barrel during the rally, and while crude fell below the $100 mark after the announcement of a two-week ceasefire between the US and Iran on April 7, it still remains above the $70 level before the war. Prices remain volatile amid uncertainty over the deal and continued disruption to shipping through the strait.
Diesel and kerosene have emerged as major pressure points in the dispute. European benchmark prices for diesel and jet fuel have risen above $200 a barrel, up from less than $100 in January, according to Bloomberg. Jet fuel prices have also risen since the start of the crisis in late February, according to industry data cited by multiple outlets.
Why has diesel become more expensive than petrol?
The European market has shifted to higher diesel consumption following decades of tax policies that lowered diesel taxes compared to gasoline.
The EU’s refining system produces a different mix of fuels than the market uses. A barrel of crude oil typically yields about 40-50% gasoline, but about 30-40% diesel and jet fuel combined, with the rest made up of heavier products.
This mismatch has made the camp structurally diesel-free. The region is a major exporter of petroleum but depends on imports for most of its diesel and jet fuel.
Diesel has traded above petrol prices at the pump in several EU countries.
The rise in overall costs is fed to consumers. The price of diesel at the pump has exceeded €2 per liter in many countries, according to national data and media reports – equivalent to about $8.80–$10.50 per US gallon, compared to about $5.60 per gallon in the US. Governments in Italy, Portugal, Slovenia, Hungary, Spain, Poland and Ireland have introduced tax cuts and other measures to cushion the impact of rising fuel costs.
Why are farmers and truck drivers protesting?
The increase in the price of diesel affects the sectors that depend more on oil, especially agriculture and road transport. The EU transport industry is facing a “speeding diesel shock,” based on the Logify hardware platform.
Ireland has been the most visible part of the conflict. Oil protests have spread across the country since last Tuesday, led by farmers, truck drivers and transport workers, disrupting supply chains and transport networks, according to local media.
The restrictions have affected fuel supplies, with queues forming at petrol stations while some have run dry amid panic buying. On Thursday, the government called on the army to lift the restrictions.
During a demonstration in Dublin on Friday, protesters carried a coffin “RIP Ireland” written on it.
What does the jet fuel shortage mean for summer travel?
Airports across Europe may be affected “systematic” shortage of jet fuel within three weeks if the Strait of Hormuz remains closed, according to a letter sent by an airport industry group to the European Commission, as quoted by the Independent.
According to Corriere della Sera, “Some airports in the continent have been short of jet fuel for several days without official reporting.” The agency quoted its sources on Friday as saying “It is a very sensitive issue that the official dialogue remains lip-service,” adding that Brussels hopes the agreement between the United States and Iran will last.
Ryanair, Europe’s biggest airline by passenger numbers, has begun cutting flights to popular destinations, with chief executive Michael O’Leary warning that the airline will not be able to run its full summer schedule if the Strait of Hormuz remains closed.
