October 30, 2023 [Oil Price]- The European Union held an emergency meeting on Friday to discuss the potential for diesel supply shocks stemming from the conflict between Israel and Hamas.
The EU Commissioner for Energy Kadri Simson called an emergency meeting on Friday to discuss the potential issues should there be a diesel supply outage, like strikes and long truck queues waiting for diesel.
“Oil is important. Not enough diesel could lead to strikes,” one European Union official told Reuters. “Is this a 1973 moment or not?”
After the group debated the risks of a diesel shortage, the EU’s oil coordination group determined that the risks are much lower than during the 1973 oil embargo, with Europe relying on oil to a much lesser extent today than they did decades ago. According to the EU official, Europe only relies on crude oil for about one-third of its energy mix.
OPEC’s supply cuts, however, are still a concern for the EU, mainly because one of the EU’s top crude oil suppliers is OPEC’s largest producer, Saudi Arabia.
“The Middle East route is still of significant importance for Europe…20 million bp goes through Hormuz. It is a real choke point,” the official pointed out.
“A possible crisis would have an immediate impact on price, but it’s less of a security of supply risk, though the market is very tight because of OPEC+ cuts, tightness should ease in 2024.”
The EU currently has 90 days’ worth of net imports of crude oil or 61 days of domestic consumption per its requirement, but diesel and gasoil continue to be a risk for the EU.
The EU’s energy supply situation is still worrisome without Russia as a main supplier of oil and gas as in the years before the Ukraine invasion.
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