The war in the Middle East continues to disrupt global energy markets and aviation. The announcement of a record release of 400 million barrels of oil from emergency reserves by the 32 members of the International Energy Agency (IEA), of which the US accounts for 172 million, does not seem to be calming the oil market.
Oil prices have risen further, and plans to make the largest emergency oil reserves in history available seem to signal that energy markets are preparing for a war that could last much longer than initially expected.
Precisely because the market sees that those 400 million barrels cover “only” 20 days, prices continue to rise, and governments are preparing scenarios behind the scenes as the June/July deadline for oil reserves approaches.
Some companies are already in dire straits; Air New Zealand, for example, is canceling flights on a large scale due to unstoppable kerosene prices.
20 to 30 days of extra time
Such measures, which we have not seen since the oil crisis of the 1970s, are the result of the Strait of Hormuz blockade, a crucial route through which 20% of the world’s oil and LNG supplies pass.
As long as there is no safe corridor in the Strait of Hormuz, fears remain that the measures will not be able to quickly offset the huge supply shock caused by the war and shipping disruptions.
Brent oil, the benchmark for Middle Eastern oil, was up 7% this morning at $98,42 per barrel, remaining around $100. A barrel of US oil rose 6,6% to nearly $93.
With a daily shortfall of nearly 20 million barrels due to this blockade and the recent attacks on tankers, these 400 million barrels will only buy us about 20 to 30 extra days before the shortages really start to bite.
Challenges are “unprecedented in scale”
According to IEA chief Fatih Birol, the challenges facing the oil market are “unprecedented in scale.” In total, the 32 members of the Paris-based IEA hold more than 1,2 billion barrels (of 159 liters) in emergency reserves. In addition, companies have 600 million barrels of oil that can be released at the direction of governments. That oil can then go to refineries in crisis.
With these strategic reserves, Belgium has a buffer for 92 days; the world could hold out for about 90 to 120 days. But if the war lasts longer than three months, the reserves will run out, the price will become unsustainable, and the situation will also evolve into a shortage crisis.
Action plans
Within the EU, member states are required to maintain oil reserves equivalent to at least 90 days of imports. According to the European Commission, most countries currently have reserves equivalent to 85-90 days. This means that governments are already starting to draw up action plans, long before reserves are depleted.
These measures could range from campaigns to drive less, work from home more, or lower speed limits. However, these are not yet at the stage of concrete measures.
But Croatia and Hungary, for example, have already introduced a cap on fuel prices, and other European countries are also considering measures. And both petrol station owners and the transport sector in Belgium are putting pressure on the government to take measures, now that the war is driving pump prices sharply higher.
Since the start of the American Israeli attacks on Iran, gas prices have risen by 50% and oil prices by 27%. Converted into euros, 10 days of war have already cost European taxpayers an additional 3 billion euros in fossil fuel imports.
The European Commission, therefore, wants to provide rapid assistance to families and businesses facing sharp rises in energy prices and is calling on Member States to, for example, scrap national taxes and levies, switch energy suppliers more quickly, and set up citizen cooperatives.
Air New Zealand cancels 1,100 flights
However, drastic measures are already being taken in some sectors. Take aviation, for example. Due to the physical insecurity or airspace, airlines are flying less or not at all to the Gulf States because of the risk of drone attacks, and the sector is being hit twice as hard by the explosive rise in kerosene costs.
Because kerosene has risen 45% in 10 days, to $150 to $200 per barrel, airlines such as Air India and Hong Kong Airlines have immediately introduced fuel surcharges. For long flights to Europe, which normally go via the Middle East but now require long detours, the cost can be $125 to $200 per ticket.
It is also the reason why Air New Zealand is immediately canceling approximately 1,100 flights over the next two months, a measure that is estimated to affect 44,000 passengers.
These are mainly domestic flights and a few regional international routes. By flying less often but with fuller planes, the airline is trying to maximize fuel efficiency.
Push for SAF?
But to quote a famous saying by soccer player and philosopher Johan Cruyff: “Every disadvantage has its advantage.” The current oil crisis would suddenly make Sustainable Aviation Fuel (SAF) more economically attractive.
Normally, SAF is much more expensive than fossil kerosene. The absolute difference remains large, but relatively speaking, SAF is becoming less extremely expensive – SAF costs $200–$235 per barrel.
Since 2025, the EU has required, under the ReFuelEU Aviation Regulation, that fuel at European airports contain a minimum SAF content. The mandatory percentages are gradually increasing, meaning airlines must purchase SAF regardless of price. Due to CO₂ costs and EU rules, some airlines are trying to conclude long-term SAF contracts, which may make SAF slightly more economically attractive than before.
