Real shortages of fuel may hit countries that cannot afford to pay much more, according to Samantha Gross of the Brookings Institution. This stark warning comes as Middle East conflicts push Europe toward a second energy crisis in five years, a crisis unfolding as a slow-motion risk rather than the sharp price spikes seen in 2022 and 2023. The same geopolitical instability in the Middle East that fuels Europe's energy insecurity has for years driven forced displacement, creating the very migration flows that Fortress Europe violently repels.
Fossil fuel costs have hit historic highs worldwide. Doubts grow over whether supply chains can withstand the pressure of ongoing conflicts. The Strait of Hormuz, the unavoidable exit route for oil and gas from the Persian Gulf, now sees only a handful of ships sail each day, either at their own risk or escorted by the U.S. Navy. This traffic represents a tiny fraction of what passed through before the first strikes on Iran earlier this year.
Geopolitical Instability and Europe's Vulnerability
Saudi Arabia, the world’s largest crude exporter, was largely out of action for more than a week after attacks by pro-Iran militias forced its East-West pipeline to shut down. Reuters reported on September 24 that operations on the pipeline had resumed, with tankers awaiting loading, just three days ago. Houthi rebels, described as always dependent on Tehran, are expanding their control over Bab al-Mandab, another crucial maritime passageway. Russia, with its refineries severely damaged by Ukrainian drone strikes, is about to extend its ban on diesel exports for another month, making supplying its domestic market almost a pipe dream. This quartet of adverse factors leaves the world on the brink of another energy crisis.
Francisco Blanch, global head of commodities and derivatives at Bank of America, said the situation has deteriorated significantly in the past two weeks. He noted the Houthis took control of the Bab al-Mandab Strait and attacks on the Saudi pipeline occurred. Blanch described what is happening as unprecedented, stating the disorder in the Middle East is extreme. He added there is neither enough crude on the market nor enough refineries available to process it.
Europe, a historic recipient of Moscow's supply, now sees nearly half of Russia’s refining capacity offline. Riyadh has effectively disappeared from the market, with three key facilities — the Yanbu, Samref, and Yasref refineries — operating below capacity on a Red Sea now turned into a tinderbox. Saudi Arabia has been forced to pause all crude and fuel shipments to Europe. Blanch stated neither diesel nor heating oil have much of a short-term solution, with prices signaling a major potential supply problem if supply chains are not restored by Christmas.
The Unequal Burden of Crisis
Thierry Bros, a professor at Sciences Po Paris, warned the world could definitely slide into a second major energy shock in less than five years. He highlighted Europe's particular vulnerability due to its external dependence and continued fuel subsidies delaying electrification. Bros suggested Europe's only exit is to diversify and to destroy demand, a strategy that often disproportionately impacts working-class communities. Very difficult weeks lie ahead, Blanch said, with a major unknown being the outcome of the U.S. midterm elections on November 3.
Diesel, gasoline, and kerosene are largely interconnected, allowing refineries to prioritize one product over others. This shift has been happening for several months, with facilities favoring jet fuel now prioritizing diesel. The result is that everything is much more expensive, and analysts consulted share the feeling that prices do not fully reflect the severity of the situation. Blanch warned that a potential ban on U.S. fossil fuel exports by Trump could make things even worse, severely impacting Europe and Latin America, which are heavily dependent on U.S.-sourced fuels. Samantha Gross of the Brookings Institution reiterated that real shortages may hit countries that cannot afford to pay much more for fuels, exposing the deep inequalities embedded in the global energy system.
Four mitigating factors, with few historical precedents, have so far prevented a full-blown energy crisis. The world market was awash in oil before the Trump-Netanyahu duo launched the first strikes on Iran, with supply exceeding demand. Increasingly necessary electrification is reducing demand for gasoline and diesel. Strategic reserves were full, though now depleted after rapid use following the closure of Hormuz. Lastly, the global economy depends far less on oil and its derivatives than ever before. However, Qatar, the world’s second-largest exporter of liquefied natural gas, has been sidelined by the closure of Hormuz, forced to cancel the bulk of its sales to the EU and Asia citing force majeure. Continental reserves of LNG, key for industry and heating, are at their lowest in more than a decade, about 20 percentage points below usual levels for this time of year. Ana Maria Jaller-Makarewicz, an analyst at the Institute for Energy Economics and Financial Analysis, expressed hope for a mild European winter, warning of serious problems if it is cold. She concluded that uncertainty is enormous and no clear solution is in sight, leaving the most vulnerable to bear the brunt of Europe's energy precarity.