‘Prepare for prolonged disruption to energy markets’, Pg17

Key Highlights:

• EU Energy Commissioner Dan Jorgensen advised EU governments on March 30 to prepare for prolonged energy market disruption due to the Iran war.
• European gas prices have increased by over 70% since the start of the US-Israeli war with Iran on February 28.
• Europe's refined petroleum product supply, especially jet fuel and diesel, is a short-term concern.
• The last kerosene shipments through the Strait of Hormuz are expected in Europe around April 10.

Detailed Insights:

• Europe's dependence on imported fuel makes it vulnerable to global energy price fluctuations caused by the conflict.
• While crude oil and natural gas supplies haven't been directly affected, the closure of the Strait of Hormuz poses risks to refined petroleum product imports.
• EU sources around 15% of its kerosene from West Asian suppliers, with additional imports from Indian refineries processing Middle Eastern oil.
• European countries have kerosene stockpiles sufficient for up to three months, but localized shortages and price volatility are possible.
• Alternative suppliers like the US could partially offset supply disruptions, but complete substitution may not be feasible.
• Commissioner Jorgensen advised against measures that restrict petroleum product trade or discourage European refinery output.

Key Concepts Involved:

• Strait of Hormuz: A narrow waterway connecting the Persian Gulf and the Gulf of Oman, crucial for global oil transportation.
• Refined Petroleum Products: Products derived from crude oil through refining processes, such as jet fuel, diesel, and gasoline.
• Energy Security: Measures taken by a country or region to ensure a reliable and affordable energy supply.