The European Commission is preparing a revision of the EU’s Oil Stocks Directive after the current crisis revealed shortcomings in the existing system.
Europe is not short of fuel but the Middle East crisis is revealing some serious vulnerabilities in the way the EU manages its emergency oil stockpiles. For that the European Commission is preparing new oil stock rules as tight jet fuel markets and uncertainty around the Strait of Hormuz raise concerns over Europe’s ability to withstand a prolonged energy shock.
“There is no supply problem in the EU. There is no supply issue at present,” the European Commissioner for Transport Apostolos Tzitzikostas said. His remarks came after an informal Monday meeting of EU transport ministers in Dublin.
So far, increased production at EU refineries and alternative supplies from global markets are taking care of demand for jet fuel and diesel. “Commercial and emergency stocks remain sufficient in the European Union, I must stress,” the commissioner said.
No shortage, but markets could tighten
A proposal is likely “in the coming months” as an element of a package of measures to improve energy security. Mr Tzitzikostas did not elaborate on what these weaknesses were or what changes are in the offing.
The evolution of the conflict in the Middle East, as well as the usual demand trends for the autumn and the winter in Europe, could have indeed an impact in the coming weeks and months, and further tighten the markets. — Apostolos Tzitzikostas, EU transport commissioner
At this time, concerns relate less to a shortage of fuel in European markets than to the potential implications of a long running crisis with transnational implications. The Commission says it is “working with member states on different scenarios” and is coordinating its assessment with the International Energy Agency and market participants. Officials are not yet saying what emergency measures could be deployed.
“We are not yet there,” the Commissioner said when questioned about possible short term intervention. “We are assessing the situation, and we would ask for an extraordinary ministerial meeting only if needed,” Mr Tzitzikostas stated. He later confirmed that if the Middle East situation and energy crisis deteriorate, he would request such a meeting to discuss possible urgent measures.
Strait of Hormuz remains a concern
At the centre of Europe’s uncertainty is the Middle East and, in particular, the Strait of Hormuz. “The situation around the Strait of Hormuz remains deeply concerning, and I continue to stress the importance of freedom of navigation and safe passage,” the Commissioner said, adding that he intended to raise the issue at the United Nations General Assembly.
The consequences are already extending beyond energy markets. Some flight restrictions in the Middle East and Gulf remain in place, while crude oil and jet fuel prices remain elevated, according to the Commissioner.
For European governments, the difficulty is deciding how much support households and businesses need when nobody can confidently predict where prices will move next. In Ireland, the government has already reduced excise duties on several fuels. But warnings raised by industry representatives see diesel reach up to €2.50 per litre.
Energy shock exposes Europe’s transport dependence
The crisis is also strengthening the Commission’s argument that transport resilience cannot be separated from Europe’s dependence on imported fossil fuels. The Commissioner said the EU needs “less reliance on imported fossil fuels, more diverse energy sources” and greater use of clean energy produced within Europe.
That means accelerating electromobility while expanding public transport, rail, cycling and other alternatives to private cars. But Brussels also acknowledges practical obstacles to that strategy.
Nobody knows, we don’t know where things will be tomorrow or the next day. — Sean Canney, Minister of State with responsibility for International and Road Transport, Logistics, Rail and Ports
“In suburban areas, many citizens remain highly dependent on the private car for the daily commute,” the commissioner said, adding that this would continue until people have “credible, affordable alternatives”.
Brussels believes that the EU should hold enough stocks. However, it is still unsure how the coming global repercussions from the Middle East crisis will affect the EU’s strategic stocks. It is also unclear whether restrictions will be necessary on the energy industry and member states.
