EU Weighs More US Jet Fuel, Cleaner Aviation Amid Iran War Strains

EU weighs more US jet fuel, cleaner aviation amid Iran war strains

EU Response to Jet Fuel Supply Risks and Aviation Sustainability

By Julia Payne

Current Situation and Potential Risks

BRUSSELS, April 21 (Reuters) - The European Union will provide guidance to airlines on how to handle issues such as airport slots, passenger rights and public service obligations in the event of jet fuel shortages because of the Iran war, the bloc's transport chief said on Tuesday.

Apostolos Tzitzikostas said there were no shortages "as of today" but warned a prolonged blockage of the Strait of Hormuz would be "catastrophic" for Europe and the global economy.

Dependence on Middle East Fuel

About one-fifth of the world's oil and liquefied natural gas transited Hormuz before the U.S. and Israel began bombing Iran on February 28. The EU imports 30% to 40% of its jet fuel needs, with about half coming from the Middle East. 

Commission Measures and Emergency Planning

The European Commission is due to present a broader package of energy and transport measures on Wednesday. Tzitzikostas said it would set up a new "fuel observatory" to monitor supplies, starting with jet fuel. 

Emergency Fuel Stock Management

"If real supply issues arise, our emergency stocks must be put to best use. Any national release of fuel must be done in full transparency to avoid market distortions," he told reporters after a meeting of the EU's transport ministers.

Outlook for Airlines and Logistics

He added there were no signs of "widespread cancellations" in the coming weeks or months. The International Energy Agency warned last week that physical shortages could start as soon as June, but European airlines currently report only higher prices.

A spokesperson for IAG, owner of British Airways and Iberia, said it was "not seeing disruption to jet fuel supply in our main airports, but our airlines are already facing rising fuel costs." 

German logistics group DHL said it could secure fuel for its cargo planes in Europe into June, though the outlook for its Asian operations remained uncertain. 

Accelerating Sustainable Aviation Fuel and Alternative Imports

As part of the response, the Commission wants to use the crisis to accelerate development of the sustainable aviation fuel (SAF) and synthetic fuels sectors to cut reliance on Middle East imports, Tzitzikostas said, confirming a Reuters report last week. 

Challenges for SAF Adoption

Global airline group IATA warned last year that SAF production remains too low to meet green fuel targets and costs up to five times more than conventional jet fuel.

Regulatory Adjustments and US Jet Fuel Imports

The EU's anti-tankering rules, aimed at stopping airlines from loading excess fuel at cheaper airports, already allow exemptions in case of shortages, but the Commission will clarify the framework on Wednesday.

The Commission is also examining alternative imports, including U.S. Jet A fuel, which has a higher freezing point than the European standard.

Impact on Passengers and Travel

"There is no need at this point to intervene in how people live, work or travel ... Europe is ready to welcome all the tourists and guests during the summer period," Tzitzikostas said, adding that high fuel prices would not justify waiving passenger compensation for delays or cancellations. 

(Reporting by Julia Payne. Additional reporting by Inti Landauro in Brussels and Joanna Plucinska in London. Editing by Louise Heavens, William Maclean and Mark Potter)