In the wake of the announcement of a two-week ceasefire between the United States and Iran, the European Commission is not yet allowing itself to pause for breath.
Borrowing the words of European Commissioner for Energy, Dan Jørgensen, last week (see EUROPE 13840/1), a Commission spokesperson said on Wednesday 8 April that the energy price crisis in Europe would “not be short-lived”.
This is despite the - at least temporary - reopening of the Strait of Hormuz, through which more than 20% of the world’s hydrocarbons passed before the start of the conflict, on 28 February.
The Oil Coordination Group, bringing together experts from the Commission, the Member States and also representatives from industry – including the aviation sector – who were invited to attend on Wednesday, acknowledged the impact of more than a month of conflict in the region on oil and kerosene prices.
While around 7% of crude oil and petroleum products in the EU came from the region (Iraq, Saudi Arabia, United Arab Emirates) just before the conflict, this percentage has risen to 40% for kerosene for aviation and diesel fuel, according to figures from the Commission.
However, the Oil Coordination Group wishes to reassure that there is currently no risk of supply shortages, nor are any expected for April, as a European official told Agence Europe.
No illusions about a “return to the status quo ante”. Despite the North Sea crude oil price dropping below the $100 mark in immediate response to the ceasefire announcement, there is no sign of a return to normal on the world’s energy markets.
“If it (the Strait of Hormuz, Editor’s note) were to reopen and remain open, it would still take several months to return to an adequate level of supply, given the disruption to refining capacity in the Middle East”, said the Director General of the International Air Transport Association (IATA), Willie Walsh, at a press conference in Singapore, on Wednesday.
As the Bruegel think tank points out in a new publication, policymakers have realised that they “can no longer afford the illusion of a return to the status quo ante” and must now “assess the options in a second and third order scenario”.
The authors of this publication consider that a toll on the Strait of Hormuz, potentially paid to Iran in exchange for allowing oil tankers to pass through, could be a fallback solution. All this in the knowledge that the provisional 10-point plan that Tehran has submitted to Washington includes maintaining Iranian control over the Strait of Hormuz.
According to Bruegel’s analysis, the Gulf States - which supply the oil passing through the Strait - would bear the highest cost.
It also adds that a rapid reinforcement of Gulf and European capabilities in the fight against asymmetric warfare would be necessary to “counter Iran’s asymmetric warfare strength, which the poorly planned US-Israeli attack revealed”. (Original version in French by Pauline Denys)