End of Middle East war may not cool oil prices – EU official

Global oil prices will remain elevated, even if the Middle East conflict was to end tomorrow, European Union (EU) commissioner for energy and housing Dan Jørgensen, said.

IMAGE: Oil pump jacks and oilfield workers at dusk. Getty Images

Since the beginning of the conflict in Iran, crude oil prices in the EU have gained by about 60%, Jørgensen said during a meeting of EU energy ministers.

A month of conflict has added about €14 billion ($16.1 billion) to the EU’s fossil fuels import bill, the commissioner added.

“As the crisis in the Middle East enters its second month, it is clear that we are facing a very serious situation,” Jørgensen said.

The commissioner indicated in his speech that while there are no immediate oil supply shortages for the EU countries, a tightness in certain product markets is already felt.

The prolonged closure of the Strait of Hormuz has cut global seaborne oil flows massively, according to media reports. Almost a fifth of global crude oil transits the strait – now stranded due to repeated attacks in the region.

“We should be under no illusion that the consequences of this crisis for the energy markets will be short-lived. Because they won't,” Jørgensen said.

By Aparupa Mazumder

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