Energy: EU monitors Middle East; stocks stable, but concerns grow over prices

Brussels – Despite the growing tensions in the Middle East, the security of energy supply in the European Union appears, for the moment, to be guaranteed. According to EU sources, this emerged from the coordination meetings on gas and oil held this morning (4 March) and attended by representatives from Italy, Hungary, Spain, Germany, France, Poland, Belgium, and the International Energy Agency. 

The European Commission has reassured that gas stocks are stable at 30 per cent. This is in line with targets, which would allow 90 per cent filling before winter, provided that imports are increased during the summer season. The current situation, according to the European executive, is not comparable to the crisis of 2022–2023: Europe is now more diversified, demand has fallen by 15–17 per cent, and the United States, which is not affected by the conflict, remains the main supplier of LNG. However, the situation remains delicate. Of particular concern is the suspension of LNG plant operations in Qatar and the de facto closure of the Strait of Hormuz, where attacks on ships in transit have been reported. The duration of the conflict, the damage to infrastructure, and developments in the situation in this area will determine the real impact on European markets.

Although the reaction in the oil markets has been more subdued than in the gas markets, the logistical challenges are significant. The EU Commission has reported damage to refinery infrastructure in Saudi Arabia, which could affect the supply of refined petroleum products. Although only 9 per cent of EU crude oil passes through the Strait of Hormuz, dependence is much greater for finished products: Forty per cent of European imports of diesel and aviation fuel pass through the Strait, as does 15 per cent of total aviation fuel consumption.

At present, no coordinated or individual measures have been requested or adopted by Member States. However, there is considerable concern about prices. “Short-term transport obstacles are relatively easy to manage, but if the situation continues over time, there could be supply risks and higher prices,” warned an EU official. While the gas coordination group has scheduled its next meeting for 26 March, the oil group could meet as early as next week. Given the evolution of the conflict, it cannot be ruled out that ad hoc meetings may be convened even before the scheduled dates.