Global Energy Crisis and the Threat to Air Travel
The global energy crisis, driven by the ongoing conflict in the Middle East, is creating significant challenges for international air travel. According to Fatih Birol, the Executive Director of the International Energy Agency (IEA), Europe may have “maybe six weeks or so of jet fuel left.” This warning comes as oil supplies through the Strait of Hormuz remain blocked, raising concerns about potential flight cancellations in the near future.
Birol described the current situation as “the largest energy crisis we have ever faced,” with the closure of critical supply routes through the Strait of Hormuz having far-reaching consequences. He referenced the famous music group Dire Straits, noting that “it’s a dire strait now” and emphasizing the major implications for the global economy.
“The longer it goes, the worse it will be for the economic growth and inflation around the world,” Birol said. He highlighted that the crisis would lead to higher gasoline, gas, and electricity prices, with some countries being hit harder than others. Japan, Korea, India, China, Pakistan, and Bangladesh are among those most affected, according to Birol.
Birol also warned that developing countries in Asia, Africa, and Latin America would suffer the most, as their voices are often less heard on the global stage. He added that the impact would eventually reach Europe and the Americas.
“If the Strait of Hormuz is not reopened, 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,” he said.
Concerns Over the ‘Toll Booth’ System
Birol criticized the so-called “toll booth” system reportedly set up by Iran for ships passing through the Strait of Hormuz. He expressed concern that allowing such a system could create a dangerous precedent, potentially leading to similar toll systems in other waterways.
“If we change it once, it may be difficult to get it back,” he said. “It will be difficult to have a toll system here, applied here, but not there.”
Birol emphasized the importance of ensuring that oil flows unconditionally from one point to another, without any additional charges or restrictions.
Potential Jet Fuel Shortages in May or June
Last week, the Airports Council International Europe warned the European Commission that shortages of jet fuel could begin at the start of May if tankers do not resume sailing through the Strait of Hormuz. The waterway, which carries a fifth of the world’s crude oil and liquefied natural gas, has been almost completely blocked since the Iran war began with US-Israeli air strikes on 28 February.
Birol warned that Europe could face jet fuel shortages “maybe beginning of May,” though the situation varies across the continent. Countries like Austria, Bulgaria, and Poland have comfortable stocks, while Britain, Iceland, and the Netherlands face more severe challenges. France is somewhere in the middle, and the impact will differ for various airports and airlines.
ING bank economist Rico Luman noted that smaller, inland airports will be in a weaker position compared to main hubs. He added that while a full halt in air travel is unlikely, some airlines and airports may experience partial cancellations.
Serious Supply Issues and Regulatory Challenges
Airlines are struggling with limited visibility into their fuel supply chains, making it difficult to plan flight schedules. Airlines for Europe (A4E), which includes major carriers like Air France-KLM, Lufthansa, and Ryanair, has urged the European Union to provide real-time information on jet fuel stocks at airports.
However, fuel suppliers are hesitant to share sensitive commercial data with their clients. TotalEnergies has warned that if oil supplies from the Gulf remain blocked in June, it may not be able to supply all of its customers.
“If this war and this blockade last more than three months, we’ll begin to face some serious supply issues in some products like jet fuel,” said TotalEnergies CEO Patrick Pouyanne.
A4E has also suggested that the European Commission consider authorizing the import of US jet fuel, which is produced to a slightly different standard than in the rest of the world. However, regulatory, political, and logistical challenges make this option unlikely to be implemented in the near future.
