Europe has “maybe six weeks or so” of remaining jet fuel supplies, the head of the International Energy Agency said Thursday, warning of possible flight cancellations “soon” if oil supplies remain blocked by the Iran war. The warning lays bare how a handful of armed actors and energy gatekeepers can throw ordinary life into chaos, with travelers, workers, and poorer countries left to absorb the damage.
Who Pays When the Supply Chain Snaps
IEA Executive Director Fatih Birol said the situation stemmed from what he called “the largest energy crisis we have ever faced,” caused by the pinch-off of oil, gas and other vital supplies through the Strait of Hormuz. He said the impact would be “higher petrol (gasoline) prices, higher gas prices, high electricity prices,” and warned that the longer the crisis goes on, “the worse it will be for the economic growth and inflation around the world.”
Birol said the countries that would suffer the most would be developing countries, including poorer countries in Asia, Africa and Latin America. “Everybody is going to suffer,” he said, adding, “Some countries may be richer than the others. Some countries may have more energy than the others, but no country, no country is immune to this crisis.”
Nearly 20% of the world’s traded oil passes through the Strait of Hormuz in peacetime, and Birol warned that not reopening the waterway within weeks could compound the repercussions for global energy supplies. “In Europe, we have maybe six weeks or so (of) jet fuel left,” he said. “If we are not able to open the Strait of Hormuz ... I can tell you soon we will hear the news that some of the flights from city A to city B might be canceled as a result of lack of jet fuel.”
The Bosses of Movement and the People Stuck With the Bill
The airlines are already adjusting to the squeeze. Dutch airline KLM and U.K.-based budget carrier easyJet said Thursday that they were not experiencing current fuel shortages, without commenting further on the IEA’s warning. U.S. carrier Delta Air Lines, which frequently flies to destinations across Europe, said it was aware of the continent’s “potential jet fuel supply issue” and was monitoring the situation, although it did not expect immediate impacts. The three airlines were among those that had already seen higher costs eat into their budgets.
KLM is cutting 160 flights to and from Amsterdam’s Schiphol airport next month, accounting for about 1% of its total European routes. The airline cited “rising kerosene costs,” and said a limited number of flights are “no longer financially viable to operate.” Travelers are already paying the consequences, with some carriers increasing ticket fares and add-on fees.
Birol added that many government leaders told him that if Hormuz is not open until the end of May, many countries — starting from the weaker economies — are going to face huge challenges, moving from high inflation numbers to slow growth or even recession in some cases. The people at the bottom are the ones told to brace for the fallout while the institutions above them talk in the language of markets, budgets, and “viability.”
A Strait Controlled by Force
Birol spoke out against the so-called “toll booth” system that Iran has applied to some ships, letting them travel through the strait for a fee. He said allowing that to become more permanent would risk setting a precedent that could then be applied to other waterways, including the vital Malacca Strait in Asia. “If we change it once, it may be difficult to get it back,” he said. “It will be difficult to have a toll system here, applied here, but not there.” He added: “I would like to see that the oil flows unconditionally from the point A to point B.”
More than 110 oil-laden tankers and over 15 carriers loaded with liquefied natural gas are waiting in the Persian Gulf and could help ease the energy crisis if they could escape through the Strait of Hormuz to world markets, Birol said, adding: “But it is not enough.” Even with a peace deal, war-damage to energy facilities means it could be many months before preconflict levels of production are restored, he said. “Over 80 key assets in the region have been damaged. And out of these 80, more than one-third are severely or very severely damaged,” he said. “It will be extremely optimistic to believe that it will very quick,” Birol said. “It will take gradually, gradually, up to two years to come back where we were before the war.”
Birol said it was incomprehensible that “a couple of hundred men with guns” — apparently referring to Iranian forces — were able to hold hostage the global economy. He said his Paris-based agency, which advises governments on energy policy and helped coordinate a record release of emergency oil reserves earlier in the crisis, had warned for years about the critical importance of the Strait of Hormuz. That same apparatus now presents itself as crisis manager after years of warning went unheeded.
Birol said the global shock could spur the embrace of other energy technologies, including nuclear power, and “will reshape the global energy map for the next years to come.” On his office shelves, he said he had a couple of soccer balls, as he is a devoted supporter of the Turkish club Galatasaray, and other memorabilia, including a photo of his late father playing soccer, and reams of books. One book stood out for its timely title: “Oil, Power and War.” Birol said: “Energy and geopolitics have been always interwoven.” He added: “But I have never, ever seen ... such a dark and long shadow of geopolitics.” He also said: “Unfortunately, energy is at the heart of many conflicts which, again, makes me, as an energy person, rather sad, to be honest.”