A warning about fuel rationing has been issued as a top energy official discusses potential actions amidst escalating tensions with Iran causing a deeper global crisis.
The European Union is exploring various options to brace for a prolonged energy impact due to Iran disrupting a significant portion of the global supply. Dan Jorgensen, the EU’s energy commissioner, revealed that fuel prices, including petrol, diesel, and jet fuel, have surged since the beginning of the conflict in the Middle East, with expectations of further deterioration in the near future.
Jorgensen emphasized the likelihood of enduring high energy prices, stating that the situation is anticipated to worsen in the upcoming weeks.
While the UK is no longer part of the EU, the decisions made by neighboring countries could have cascading effects on industries heavily reliant on fuel.
In discussions with the Financial Times, Jorgensen highlighted the escalating fuel crisis and disclosed that the EU is devising strategies to manage the situation, which may involve fuel rationing and tapping into emergency oil reserves.
He cautioned that the crisis could persist for an extended period, emphasizing the importance for countries to ensure adequate reserves to navigate the situation.
Amid retaliatory actions against US and Israeli strikes, Iran’s disruptions, including drone attacks and blocking the vital Strait of Hormuz, have led to a halt in a significant portion of the world’s oil and natural gas shipments passing through the strait.
The interruptions in this crucial shipping lane have resulted in a surge in prices due to reduced supply. For instance, oil prices spiked above $109 per barrel, a substantial increase from the pre-conflict levels around $70 per barrel.
Notably, petrol and diesel prices in the UK have seen visible increases at the pumps, with unleaded rising by approximately 22p per liter and diesel soaring by 43p per liter since the conflict began.
Addressing the ongoing global crisis, Prime Minister Keir Starmer mentioned the government’s active monitoring of the situation’s impact in Britain during COBRA meetings.
The UK has been advocating to end the blockade in the Strait of Hormuz, with efforts to pressure Iran through potential sanctions if the waterway remains closed.
Additionally, Lord Richard Walker, the cost-of-living advisor, proposed reconsidering the planned fuel duty increase for September, suggesting that the current circumstances warrant a discussion on extending or enlarging the fuel duty cut.
The International Energy Agency has urged immediate actions to reduce demand, including driving at slower speeds, in response to the crisis stemming from the conflict in the Middle East.
The IEA issued a set of recommendations for governments, businesses, and households to mitigate the economic impacts of oil market disruptions, emphasizing strategies like working from home, promoting public transport over private travel, and adopting eco-driving practices to reduce fuel consumption.
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