This Friday, European officials discussed diversifying oil stocks and building reserves for diesel and gas oil: EU Energy Commissioner Khadri called for an emergency meeting of the bloc’s oil coordination committee, as reported by the ‘Reuters’ agency. Simpson and aimed to assess potential supply risks as the Israel-Hamas conflict escalates.
“Oil is important. Shortage of diesel could lead to strikes. We don’t want our trucks queuing up to buy diesel,” said an official. “Is this a 1973 moment or not?”
The conflict in Gaza has rekindled memories of the 1973 oil shock during the Yom Kippur War, when OPEC – the Organization of the Petroleum Exporting Countries – imposed an oil embargo on Israel’s Western backers, causing fuel shortages.
Experts at the European meeting concluded that the risks are much lower than they were 50 years ago, as the EU depends on oil for only about 30% of its energy mix, with Saudi Arabia as one of the three main suppliers. “A potential crisis would have an immediate impact on prices, but it is a low supply security risk, although the market is already very tight due to OPEC+ cuts. The tightness should ease in 2024,” he said.
“The Middle East route is still of significant importance to Europe: 20 million barrels per day (bpd) pass through Hormuz. It is a real suffocation,” he said.
A fifth of global demand passes through the Strait of Hormuz every day and Western powers are nervous about an escalation of the conflict, which could lead to a blockade or increase the risks of navigating the narrow passage.
Oil stocks currently meet 90-day demand, the official pointed out to Reuters, and Europe’s vulnerability is in diesel: more than 50% of European freight traffic depends on diesel trucks.
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