Europe is facing a critical shortage of jet fuel, with reserves projected to last only about six weeks, according to the head of the International Energy Agency (IEA).

In an interview with The Associated Press, the IEA chief highlighted the gravity of the situation, drawing a parallel to the rock band Dire Straits. He emphasized that this shortage could significantly impact the global economy, exacerbating issues like economic growth and inflation if unresolved.

The IEA leader further explained that the shortage would lead to increased costs for gasoline, natural gas, and electricity.

“We have just about six weeks of jet fuel left in Europe,” he remarked. “If the Strait of Hormuz remains closed, we might soon hear about flights being canceled due to fuel shortages.”

In response, Dutch airline KLM and the UK-based budget airline easyJet have stated they are not currently facing fuel shortages, though they did not directly address the IEA’s warning.

On the other side of the Atlantic, Delta Air Lines, which operates numerous flights to Europe, acknowledged the potential jet fuel supply challenges. While they are monitoring the situation closely, they do not anticipate immediate disruptions. However, like many airlines, they are already feeling the pressure of rising operational costs.

In general, some European countries hold several months’ worth of jet fuel inventory at a time, according to an IEA report released this week.

Jet fuel — a refined kerosene-based oil product — is airlines’ biggest cost, making up about 30 per cent of overall expenses, according to the International Air Transport Association. And jet fuel prices have roughly doubled since the war began. Shortages could start next.

Here’s a look at how jet fuel supplies work.

How does jet fuel get to the plane?

Jet fuel is made from crude oil at refineries, which also create gasoline and diesel.

Airlines generally buy jet fuel from refineries or fuel companies, similar to drivers buying gasoline from stations, but on a much larger scale. Jet fuel travels on ships and through pipelines and is stored by airlines at airports.

Purchasing is handled by airlines. If fuel supplies are running out in a region, that doesn’t necessarily mean there will be no flights. Some airlines might have more stored than others.

But remaining flights are likely to be expensive, reflecting fuel costs.

Larger airlines have advantages in regions with shortages. They have the financial means to deal with high prices, said Jacques Rousseau, managing director at financial firm Clearview Energy Partners.

In Europe, a number of countries are now relying on less than 20 days of coverage in their fuel supplies, according to this week’s IEA report. Supplies haven’t dropped below 29 days since 2020, the report said.

How much is the world supply of jet fuel lagging?

The world is losing 10 million to 15 million barrels of oil a day due to the closure of the Strait of Hormuz, said Pavel Molchanov, senior investment strategist at investment firm Raymond James & Associates.

“There are exactly the same refineries in exactly the same places in Asia and Europe, but if there is not enough oil for those refineries to operate, it’s going to lead to physical supply disruption,” he said.

Even though the IEA has released 400 million barrels of oil from members’ emergency reserves, that won’t help in the short term, he added.

“It could take until the end of the year to get all of those barrels onto the market,” he said.

The blaze erupted shortly after 11 pm on Wednesday night at the Viva Energy refinery in Geelong.

Albanese said the fire will not change the fuel situation in the country.

He said its diesel and aviation fuel production continued at 80 per cent of capacity.

Petrol production also continued, albeit at lower levels of 60 per cent.

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