Europe has ‘six weeks of jet fuel left,’ energy boss warns

Europe has “perhaps about six weeks” of remaining supplies of jet fuel, the head of the International Energy Agency has warned.

“In the past there was a group called ‘Dire Straits.’ It is a difficult situation now and it will have major consequences for the global economy. And the longer it goes on, the worse it will be for economic growth and inflation around the world,” he told the Associated Press.

The impact will be “higher gasoline prices, higher gas prices and high electricity prices,” Birol said.

“In Europe we may have about six weeks of jet fuel left,” he said. “If we cannot open the Strait of Hormuz… I can tell you that we will soon hear the news that some flights from city A to city B may be canceled due to a lack of jet fuel.”

Dutch airline KLM and British budget airline easyJet said they are not currently experiencing fuel shortages, without commenting further on the IEA’s warning.

Meanwhile, US airline Delta Air Lines – which regularly flies to destinations across Europe – said it was aware of the “potential jet fuel supply problem” on the continent and was monitoring the situation, although it did not expect any immediate impact. Yet all three airlines are among those that have already seen higher costs eat into their budgets.

According to an IEA report released this week, some European countries generally have several months’ supply of jet fuel at a time.

Aviation fuel – an oil product based on refined kerosene – is the largest expense for airlines, accounting for about 30 percent of total expenses, according to the International Air Transport Association. And jet fuel prices have roughly doubled since the war began. Shortages could then arise.

Here’s how jet fuel delivery works.

How does jet fuel get into the plane?

Jet fuel is made from crude oil in refineries, which also produce gasoline and diesel.

Airlines generally purchase jet fuel from refineries or fuel companies, similar to drivers purchasing gasoline from stations, but on a much larger scale. Jet fuel travels on ships and through pipelines and is stored at airports by airlines.

Purchasing is provided by airlines. If fuel supplies run out in a region, that doesn’t necessarily mean there won’t be any more flights. Some airlines may have more in storage than others.

But the remaining flights are likely to be expensive, due to fuel costs.

Larger airlines have advantages in regions with shortages. They have the financial resources to deal with high prices, said Jacques Rousseau, director of financial firm Clearview Energy Partners.

According to this week’s IEA report, a number of countries in Europe now rely on less than 20 days of fuel supply coverage. Inventories have not fallen below 29 days since 2020, the report said.

To what extent is the world supply of aviation fuel lagging behind?

The world is losing 10 to 15 million barrels of oil per day due to the closure of the Strait of Hormuz, said Pavel Molchanov, senior investment strategist at investment firm Raymond James & Associates.

“There are exactly the same refineries in exactly the same places in Asia and Europe, but if there is not enough oil to run those refineries, it will lead to physical supply disruption,” he said.

Although the IEA has released 400 million barrels of oil from members’ emergency reserves, that will not help in the short term, he added.

“It could take until the end of the year for all those barrels to hit the market,” he said.

The fire broke out at the Viva Energy refinery in Geelong shortly after 11pm on Wednesday evening.

Albanese said the fire will not change the fuel situation in the country.

He said diesel and jet fuel production remained at 80 percent of capacity.

Gasoline production also continued, albeit at a lower level of 60 percent.

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