Europe has “maybe six weeks or so” of remaining jet fuel supplies, the head of the International Energy Agency said Thursday in a wide-ranging interview, warning of possible flight cancellations “soon” if oil supplies remain blocked by the Iran war.
IEA Executive Director Fatih Birol painted a sobering picture of the global repercussions of what he called “the largest energy crisis we have ever faced,” stemming from the pinch-off of oil, gas and other vital supplies through the Strait of Hormuz.
“In the past there was a group called ‘Dire Straits.’ It’s a dire strait now, and it is going to have major implications for the global economy. And the longer it goes, the worse it will be for the economic growth and inflation around the world,” he said in an interview.
The impact will be “higher petrol (gasoline) prices, higher gas prices, high electricity prices,” said Birol, speaking in his Paris office looking out over the Eiffel Tower.
Economic pain will be felt unevenly and “the countries who will suffer the most will not be those whose voice are heard a lot. It will be mainly the developing countries. Poorer countries in Asia, in Africa and in Latin America,” said the Turkish economist and energy expert who has led the IEA since 2015.
But without a settlement of the Iran war that permanently reopens the Strait of Hormuz, “Everybody is going to suffer,” he added. “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,” he said.
Nearly 20% of the world’s traded oil passes through the Strait of Hormuz in peacetime. 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 cancelled as a result of lack of jet fuel.”
Dutch airline KLM and London-based budget carrier easyJet said Thursday that they were not experiencing current fuel shortages, without commenting further on the IEA’s warning. Both airlines are among those that have already seen higher costs eat into their budgets.
KLM has already said it will cut 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 that a limited number of flights are “no longer financially viable to operate.”
Travellers are already paying the consequences. Beyond flight cancellations, some other carriers are increasing ticket fares and add-on fees.
Even with a peace deal, war-damage to energy facilities means it could be many months before pre-conflict 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.”
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