Despite the end to the Gulf war, Europe must prepare for an oil supply crunch.

Experts at the Bruegel think tank based in Brussels make this conclusion in their report entitled Europe must prepare for a possible oil supply crunch and propose measures that will hit the ordinary European consumer once again.

The effective closure of the Strait of Hormuz on 28 February 2026 in the wake of the U.S. and Israeli attack on Iran created the largest energy supply shock in history.

The International Energy Agency (IEA) estimates oil supply from the affected region to have fallen by 14.4 million barrels a day from its pre-war levels, and global oil supply, by 12.8 million barrels a day. As supply stays low and demand rises due to summer travel, this shortfall is likely to increase further.

Even if the Strait of Hormuz reopens soon, the global oil market is expected to remain undersupplied well into 2027 as restarting production facilities and global logistics will take several months. Restoring the pre-war supply chain means relocating hundreds of tankers from other trade routes, moving workers, and reopening oil fields.

The European Union’s economy is highly exposed to higher oil prices and supply shortfalls: in 2024, oil made up 38 percent of the EU’s energy mix, with 97 percent of its crude oil consumption sourced from abroad.

Since 1990, imports of jet fuel and diesel grew fivefold and twenty-five-fold, respectively. For diesel, around 17 percent of the EU’s supply is imported, mainly from Saudi Arabia, the USA and India. For jet fuel, imports account for around 38 percent of supply, with Kuwait, India and the United Arab Emirates as the major exporting countries.

The EU’s overall refining capacity has decreased by 5 percent since 2015. Oil refineries can, to a certain extent, switch between different oil products, but the further they move from their optimal input, the less efficiently they operate.

The fill levels show a mixed picture: while crude oil and diesel stocks appear stable relative to their 2021-2025 average, jet fuel stocks have depleted sharply since January, reaching less than 70 percent of their five-year average by May.

Based on this, the experts of the Brussels think tank recommend a number of steps, among which the following stand out:

- EU member states should halt the rollout of untargeted fuel subsidies that only sustain oil demand during periods of scarcity;

- a further release of emergency oil stocks should be avoided;

- the EU should engage with its members to prepare a contingency plan for coordinated oil demand reduction measures in case of a supply crunch and to reduce its dependency on imported fossil fuels; and

- the EU should use this crisis to accelerate its transition to clean energy and electrification, which would both cut emissions and reduce its dependence on imported fossil fuels.

As we can see, the Bruegel experts suggest measures that could hurt the consumer, and they recommend continuing the same energy policy that has largely caused the current economic crisis and industrial decline in Europe.

Source: https://www.bruegel.org/analysis/europe-must-prepare-possible-oil-supply-crunch