Shell CEO warns: If the Strait of Hormuz remains blocked, Europe will face an energy shortage in April

Shell CEO Wael Sawan recently warned that if the Strait of Hormuz cannot be reopened, Europe could face energy and fuel shortages as early as next month. He emphasized that ensuring sufficient energy supplies is vital to national security.

Due to Iran effectively closing the critical shipping choke point, the Strait of Hormuz, supplies from Middle Eastern oil-producing countries have decreased by up to 20 million barrels per day, causing global costs for energy, fertilizers, and petrochemical products to soar. The oil and gas supply, accounting for about one-fifth of the world’s total, has sharply declined, with the impact quickly spreading to economies and supply chains worldwide.

The head of Europe’s largest oil company stated Tuesday that there is no national security without energy security. The company is working with governments worldwide to help address the oil and gas supply crisis, which has led some Asian countries to implement energy rationing.

On Wednesday, influenced by reports that the White House has submitted a plan containing 15 conditions to Iranian leaders to end the conflict, international oil prices fell from about $114 per barrel earlier this week to around $96 per barrel.

However, Sawan pointed out that if crude oil from the Gulf region cannot be restored through the vital Strait of Hormuz to global buyers, Europe could face fossil fuel shortages within weeks.

Speaking at a major oil industry conference in Texas, Sawan said, “South Asian countries will be hit first, followed by Southeast Asia and Northeast Asia. As April approaches, the impact on Europe will become even more severe.”

He noted that the ongoing four-week crisis has already affected aviation fuel supplies—its price has doubled since the conflict erupted. Diesel may soon come under pressure, and as Europe and the U.S. enter the summer travel peak, the gasoline market will also tighten.

“The problem is, we are currently mostly reactive. The best energy strategy should focus on the next 5 to 10 years, building systemic resilience from now on.”

This stern warning echoes statements from German Economy Minister Catherine Reiche. At the same industry conference, she warned that if the conflict persists, Europe could face energy shortages as early as late April or May.

She added that Germany’s decision to phase out nuclear power was a huge mistake. Importing more natural gas via LNG ships from overseas will be an important part of the solution.

ConocoPhillips CEO Ryan Lance said that regardless of oil price fluctuations, the U.S., as the world’s largest oil producer, will find it difficult to significantly increase output before 2027. He noted that U.S. producers are following their capital expenditure plans set earlier this year and are unlikely to adjust flexibly in the short term.

Meanwhile, potential shocks to Europe’s energy supply could trigger long-term global economic recession risks. BlackRock CEO Larry Fink stated that if Iran continues to blockade the Strait of Hormuz and oil prices remain high, it will have a “profound impact” on the global economy.

Although the ultimate scale and direction of the conflict remain uncertain, Fink outlined two possible scenarios: one, a comprehensive easing of the conflict with oil prices falling back to around $70 per barrel before the crisis; or two, escalation of the conflict, pushing prices to historic highs.

He warned that in the future, oil prices could stay above $100 for a long time, even approaching $150, which would have a deep impact on the economy and could lead to “a significant and sharp recession.”

(Article source: Cailian Press)