Europe could face a shortage of energy and fuel as soon as next month if the Strait of Hormuz does not reopen to oil and gas shipping, Shell’s chief executive has warned. Wael Sawan told an oil industry conference in Texas that South Asia was first to feel the brunt of the crisis, followed by southeast Asia, northeast Asia, and now Europe as April approaches.
Sawan said the crisis, now in its fourth week, had already affected supplies of jet fuel, which has doubled in price since the start of the conflict. Diesel could come under pressure next, followed by petrol as the summer driving season begins in the US and Europe. He added that Shell was working with governments to address the supply crisis, which has already led to energy rationing in some Asian countries.
Oil prices dipped to about $100 a barrel on Wednesday from highs of about $114 at the start of the week, following reports that the White House had sent a 15-point peace plan to Iran’s leaders. However, without a return of crude deliveries from the Gulf via the Hormuz channel, Europe could face shortages within weeks.
Germany’s economy minister, Katherina Reiche, echoed the warning, telling the same conference that energy supply scarcity could occur in late April or May if the conflict continued. She added that Germany’s decision to phase out nuclear energy was a huge mistake and that greater imports of gas via super-chilled tankers would be important.
The boss of BlackRock, Larry Fink, warned that if oil hit $150 a barrel, it could lead to a prolonged global economic recession. He outlined two scenarios: one where a resolution allows oil prices to return to pre-crisis levels of about $70 a barrel, and another where prices reach record highs, causing a “stark and steep recession”.
A British government spokesperson said: “The UK has diverse and resilient energy supply. We continue to work with partners on the international situation.”
