Hormuz Closure Escalates Jet Fuel Shortage Risks in Europe and Asia

The continued closure of the Strait of Hormuz poses a significant threat to aviation fuel supplies in Asia and, to a lesser extent, Europe. This situation points towards a potential structural crisis that could severely disrupt air travel, particularly across the European continent.

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The situation could evolve within the next three or four weeks into a structural crisis regarding jet fuel supplies.

Claudio Galimberti, an energy economist at Rystad Energy, cautioned that the situation could evolve into a structural crisis for jet fuel supplies within the next three to four weeks. He warned of the possibility of sharp reductions in flights across Europe, potentially beginning as early as May and June. While some flights have already been canceled due to fuel shortages, the European Commission maintains that there is currently no evidence of a widespread deficit within the EU, though future supply imbalances remain a concern.

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We might see sharp reductions in flights in Europe, possibly starting in May and June.

The Airports Council International Europe has echoed these concerns, indicating that a jet fuel shortage could emerge within three weeks if oil tanker traffic through the Strait of Hormuz does not resume. The Strait, which historically handled about one-fifth of the world's crude oil and LNG, has seen near-complete navigation paralysis since the start of the U.S.-Iran conflict on February 28.

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There is currently no evidence of a shortage of fuel within the EU.

International Energy Agency chief Fatih Birol also warned Europe could face jet fuel shortages starting in May. However, a recent report from the agency suggested that if global jet fuel markets tighten and European markets cannot secure more than 50% of their usual supply from the Middle East, inventories could fall to a critical level of 23 days by June. The impact will vary significantly, with some countries like Japan having substantial reserves, while others like Austria, Bulgaria, and Poland have comfortable stocks, unlike the UK, Iceland, and the Netherlands. Smaller airports are expected to be more vulnerable than major hubs, suggesting partial flight cancellations rather than a complete shutdown.

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Supply imbalances may occur in the near future, especially in jet fuel.