Europe facing energy shortages by next month as Strait of Hormuz chaos deepens, warns Shell boss
Europe could face energy shortages next month as the war in the Middle East drags on, Shell’s boss has warned.
Wael Sawan, the oil giant’s chief executive, said it was working with governments to help them resolve the energy crisis since Iran closed the Strait of Hormuz last month, which has led to chaos in markets and fears of a global economic crisis.
About one-fifth of the world’s oil and liquefied natural gas passes through the Bosphorus, but the US-Israeli war against Iran has almost completely halted shipments. However, on Tuesday evening, Iran told the United Nations and the International Maritime Organization (IMO) that it would allow some “non-hostile” ships to pass through the Mediterranean. Finance Times reported.
Speaking at a conference in Houston, Texas, Mr. Sawan noted that countries in Asia, which are heavily dependent on oil and gas from the Middle East, have already imposed restrictions on energy use, such as a four-day work week.
He suggested that European countries may soon need to take similar measures.
“It’s a ripple effect,” he said. “As we enter April, we see this load first in South Asia, moving towards southeast Asia, northeast Asia and then Europe.
“So we’re trying to work with governments to alert them to the levers they might need to pull, including demand-side measures, what they need to do about storage, what they need to do about buying shares, etc.”
Oil prices rose above $100 per barrel after Iran began to blockade the Strait of Hormuz and prevent the flow of oil through this route.
Jet fuel supplies have already been affected by the conflict and Mr Sawan warned that diesel supplies would be followed by gasoline supplies.
Mr Sawan announced that Shell was also monitoring natural gas projects and oil opportunities in Venezuela following the ouster of former president Nicolas Maduro. He said they could approve one or two projects in the South American country before the end of the fiscal year if the financial and legal situation in the country allows.
Motorists in the UK have been charged an additional £307 million for petrol and diesel since the US and Israel attacked Iran on February 28, according to analysis by the RAC Foundation.
The average price of unleaded petrol at pumps in the UK on 16 March was 140.28 pence per liter and 158.78 pence per liter for diesel. The average price of unleaded petrol on March 23 was 144.16p and 166.88p for diesel, up 3.9p and 8.1p respectively on the week.
The International Energy Agency has identified several measures governments should take to reduce oil and gas consumption, including encouraging people to work from home or carpool.
Millions of Britons struggling with energy bills will not be helped but will offer targeted support “to those who need it most”, Rachel Reeves said on Tuesday.
The government is said to be leading coalition efforts between countries including France and the United States to help ships pass through the key oil route and is considering sending mine hunters to help reopen the strait.
Donald Trump on Monday took a five-day pause on his ultimatum to Iran demanding that the country open the Strait of Hormuz or face the destruction of its power plants.
