Europe has just 6 weeks of jet fuel left and flight cancellations are coming, IEA warns

International Energy Agency Executive Director Fatih Birol warned this week that Europe has "maybe six weeks or so [of] jet fuel left" and that some flights between European cities could be canceled as a result of the ongoing blockage of the Strait of Hormuz.

"In the past there was a group called 'Dire Straits.' It's a dire strait now, and it is going to have major implications for the global economy. And the longer it goes, the worse it will be for the economic growth and inflation around the world," Birol told the Associated Press.

Birol called the situation "the largest energy crisis we have ever faced." Without a permanent reopening of the Strait, he said, the economic pain would include higher gasoline, gas, and electricity prices. "Some countries may be richer than the others. Some countries may have more energy than the others, but no country, no country is immune to this crisis," he said.

Even if a peace agreement were reached, Birol cautioned that a swift return to pre-war production levels is unlikely. More than 80 key energy assets in the region have been damaged, with more than a third described as severely or very severely damaged, he said. A full recovery could take up to two years.

Birol also flagged concern about Iran's practice of charging fees to ships transiting the Strait, warning that allowing such a "toll booth" system to become permanent could set a precedent for other strategic waterways, including the Strait of Malacca in Asia.

The warning follows a period of mounting pressure on global jet fuel markets. Between late February and early April, the cost of jet fuel at U.S. airports surged — from $2.50 a gallon on Feb. 27 to $4.88 a gallon by April 2, a near-doubling in price. Among carriers already responding to the crunch, SAS announced it is pulling 1,000 April departures from its schedule, and Ryanair CEO Michael O'Leary indicated the airline may trim its summer flying program should fuel supplies fail to recover, CNBC reported. Budget airline EasyJet disclosed this week that the crisis has dented demand, with forward bookings running 2% below last year's pace, while a single month — March — added roughly £25 million to the carrier's fuel bill, according to CNBC.

The airport industry group ACI Europe cautioned last week that supplies may run critically low within three weeks — a timeline that would strike at the heart of the peak summer travel season. According to the group, European economies depend on aviation for 851 billion euros, approaching $1 trillion, in annual GDP output, with some 14 million jobs tied to the sector.

The wider energy problems are caused by the near-closure of the Strait of Hormuz, which used to handle about 25% of the world's seaborne oil trade before the war. IEA data shows that daily shipments of crude and refined products through the Strait dropped to just 2 million barrels in March, compared to about 20 million barrels a day before the conflict. The IEA's April oil market report said that reopening the Strait "remains the single most important variable in easing the pressure on energy supplies, prices and the global economy."