The shortage wave is heading west
Europe could start running low on fuel before the end of April, Shell CEO Wael Sawan warned at the CERAWeek energy conference in Houston on Tuesday.
"South Asia was first to get that brunt. That's moved to Southeast Asia, Northeast Asia and then more so into Europe as we get into April," Sawan said.
Jet fuel is already in short supply across the continent. Prices for aviation fuel have doubled since US and Israeli forces launched strikes on Iran on February 28, triggering Tehran's de facto closure of the Strait of Hormuz. Diesel is next in line, Sawan said, and gasoline will tighten as Europe heads into peak summer driving season.
Brent crude traded near $102.22 a barrel on Wednesday, while WTI sat at $91.39. Both benchmarks have pulled back from the $119 spike earlier this month, partly on hopes that Washington's 15-point ceasefire proposal could ease tensions. Iran rejected the plan hours after it was made public.
Four weeks in, and the cupboard is thinning
The Hormuz blockade is now in its fourth week. Roughly one-fifth of global oil and a similar share of liquefied natural gas moved through the strait before the war. That traffic has collapsed by more than 90%, according to vessel-tracking firm Kpler.
The hit to LNG has been especially brutal. Iranian missiles knocked Qatar's Ras Laffan complex partly offline on March 19, wiping out 17% of the country's export capacity. Repairs could take up to five years.
The IEA responded with a record 400-million-barrel release from strategic reserves, but crude prices barely flinched. Sawan suggested Europe had been caught flat-footed.
"The problem is we are more in reaction mode," he said. "The best energy strategies are the strategies that actually look five, 10 years out and build resilience from now."
Germany sounds the alarm too
Sawan is not alone in warning about Europe. German Economy Minister Katharina Richter said last week that her country could face spot shortages of diesel and heating fuel by late April or early May. Germany accelerated its nuclear phase-out in 2023 and has since leaned heavily on LNG imports through new floating terminals.
Shell said it was working directly with European governments on contingency plans. "We are trying to alert them to the various levers they will need to pull, including on the demand side, what they need to do around storage, what they need to do around purchasing," Sawan told reporters.
The bigger fear
BlackRock CEO Larry Fink, also speaking at CERAWeek, raised the stakes further. He warned that sustained oil prices above $150 a barrel could tip the global economy into recession. Brent came within striking distance of $120 two weeks ago.
For now, oil markets are betting that diplomacy or increased OPEC+ output will prevent that scenario. But with Hormuz still effectively closed and Europe's summer fuel demand approaching, the clock is working against traders.