New queues in front of fuel pumps? The International Energy Agency (IEA) warned on Thursday October 12 of possible diesel shortages in Europe this winter. The main culprits are supply constraints linked in particular to the EU embargo on Russian crude oil, in force for 10 months.
In its monthly oil report, the IEA estimates that Europe will need “sustained imports” from other countries. Particular constraints in winter on the quality of diesel could “limit” supplies anyway.
The Hamas-Israel war responsible?
As the conflict between Israel and Hamas rages, new fears over oil supplies from Iran are emerging. Iran is in fact an unofficial supporter of the terrorist group Hamas, currently singled out by the international community, and a major oil producer. But according to the IAE, the conflict has currently “no direct impact on oil flows” since its start on Saturday and “the prospect” of a risk on oil supply flows remains “currently limited” . The deadly strikes on Israel and Gaza have nevertheless “encouraged traders to integrate a higher geopolitical risk premium”, explains the IEA in its monthly report on the oil market.
Oil prices jumped by more than 5% on Monday, before falling back since Tuesday. “While there has been no direct impact on physical (oil) supply, markets will remain on alert as the crisis evolves,” warns the IEA, which says it is “ready to act if necessary to ensure that markets remain sufficiently supplied”. While the future of the conflict is full of uncertainty, “a sharp escalation of geopolitical risk in the Middle East, a region that accounts for more than a third of the world’s oil trade by sea, is straining markets” , in a context already nervous about prices, points out the institution.
A mild winter to avoid shortages
Either way, “It may take another mild winter to avoid shortages,” warns the IEA. “Ten months after the entry into force of the EU embargo on Russian crude”, intended to dry up Moscow’s oil revenues, “European refiners are still struggling to increase their processing rates and their diesel production” , explains the IEA in its report. While Europe appears to have “few options” to “improve” its stock coverage levels in the coming months, “a rebound in refinery yields” combined with more imports appears “necessary”, according to the ‘OUCH.
In terms of prices, the extension by Saudi Arabia and Russia of their voluntary reduction in oil production has already pushed prices up to almost $98 per barrel in mid-September, close to the symbolic $100 mark. All these supply constraints weigh on the prices of diesel at the pump, which have, for example, exceeded gasoline prices in France since the end of September. Last week, they reached 1.89 euros per liter compared to 1.86 euros for super unleaded 95-E10.