EU member states have been asked to prepare early response measures for the scenario of prolonged energy supply disruptions.
According to a source from Euronews, the European Commission (EC) is calling on governments of European Union (EU) member states to step up energy savings and proactively seek alternative sources of supply amid growing supply pressure caused by the conflict in the Middle East.
REDUCING OIL AND GAS CONSUMPTION
In a letter dated March 30 seen by Euronews, Dan Jorgensen, European Commissioner for Energy and Housing, asked EU countries to implement measures to reduce oil and gas consumption, particularly in the transport sector. The letter also requested energy ministers to update the current supply situation in the EU energy market and propose specific measures to reduce demand.
The letter was sent to EU member states ahead of an emergency meeting of the bloc’s ministers on Tuesday, March 31, where parties discussed how to respond to a global shortage of up to 11 million barrels of oil per day and more than 300 million cubic meters of liquefied natural gas (LNG) per day.
Earlier, on March 30, energy and finance ministers from the Group of Seven (G7) said they were closely monitoring the impact of the Iran conflict on energy markets and global economic stability, while remaining ready to deploy “all necessary measures” to ensure market security.
According to Jorgensen, rising energy prices are driving up transportation costs. Therefore, he called on EU countries to coordinate efforts to ensure that supplies of diesel and jet fuel are not disrupted, while keeping prices at acceptable levels.
Although overall oil supply is not yet considered a major concern, the biggest worries are focused on diesel and jet fuel. These are two commodities for which Europe still relies heavily on imports from Saudi Arabia and Kuwait. According to commodities trading company Alkagesta, around 20% of diesel consumed in the EU and the UK is imported from the Gulf region.
In the letter, the EC expressed concern over the EU’s heavy dependence on the Gulf region for diesel and jet fuel supplies, while alternative sources remain limited and refining capacity within the bloc is still constrained. Therefore, the EC recommended that member states postpone refinery maintenance plans to maintain output and consider the use of biofuels as an alternative solution.
Data from S&P Global’s Commodities at Sea seaborne cargo tracking service showed that in March, Europe imported 1.064 million tons of jet fuel and kerosene, down from 1.111 million tons in February.
A source in the European aviation industry warned that if the current situation continues, this summer will be very difficult and airlines may be forced to cancel flights.
The EC also called on member states to ensure sufficient gas reserves for the coming winter, while avoiding additional price pressure or market disruption. Jorgensen emphasized that the risk of serious disruption to flows through the Strait of Hormuz—a vital shipping route for around 25%–30% of globally traded oil and 20% of globally traded liquefied natural gas (LNG)—is placing significant pressure on international markets.
PREPARING FOR A PROLONGED DISRUPTION SCENARIO
According to Jorgensen, although the risk of disruption is very high, the bloc’s immediate energy supply remains “under control.” However, the EC is still urging member states to prepare early for a prolonged disruption scenario.
The EU currently depends on imported fossil fuels and must compete directly with other buyers. In the context of already tight oil and gas markets, increasingly fierce purchasing competition is causing stronger volatility in prices and supply. This pressure has even led some LNG tankers originally scheduled to arrive at European ports to divert to Asia to take advantage of higher profits.
The conflict has pushed Brent crude oil prices above USD 100 per barrel, up from around USD 70 per barrel before hostilities broke out. Analysts have warned that in unpredictable scenarios, oil prices could even surge to USD 200 per barrel.
Not only oil, but natural gas prices also face the risk of rising back to levels seen during the 2022 energy crisis. At that time, after Moscow launched its military campaign in Ukraine, the EU lost around 45% of its gas imports from Russia.
“To ensure long-term energy security for Europe, the EU needs to quickly remove unnecessary barriers, delays, and uncertainties in the process of accessing new sources of supply under current regulations,” Andreas Guth, Secretary General of the trade association Eurogas, told Euronews.
According to Jorgensen, the EU is currently in a “relatively prepared” position thanks to energy storage regulations and emergency response plans that had been prepared in advance.
Since March 20, member states have been required to relax gas storage targets to avoid panic buying and stockpiling. Accordingly, the storage level required when refilling reserves may be reduced from the 90% target to as low as 75%.
The EU currently maintains emergency oil reserves sufficient for 90 days of use and has expanded and diversified supply sources from other markets around the world. Europe’s total oil reserves, including the UK and Switzerland, stand at around 100 million tons—equivalent to nearly one year of Germany’s consumption.
On March 11, the International Energy Agency (IEA) coordinated the release of more than 400 million barrels of oil from the emergency reserves of member countries, with EU countries contributing around 20% of that amount.
The EC also emphasized the importance of bloc-wide coordination, warning that if each country implements its own policies separately, the internal energy market could be disrupted.
According to Jorgensen, measures that increase fuel consumption or restrict cross-border trade could add further pressure to supply. Therefore, he called on EU countries to act as a unified system and coordinate closely in monitoring supply in order to respond to market volatility.
