The energy crisis triggered by the war in Iran could last until 2027. “Fuel prices will not drop anytime soon,” Michel-Edouard Leclerc estimated on Monday, predicting “at least six months, perhaps until next winter, of energy crisis ahead of us.” Most economists share his pessimistic view of the situation.
The Trump administration had stated that the fallout from the war in Iran would cause only a short-term rise in oil prices. Federal forecasters, however, hold a different opinion. The US Energy Information Administration (EIA) has revised its forecasts for oil, petrol, and diesel prices upward through 2027.
The conflict started by the United States and Israel against Iran could severely disrupt global oil supply and cause a lasting surge in barrel prices to levels not seen in years.
The lack of an agreement raises fears of new strikes against oil and gas infrastructure already hit in West Asia. Repairs are expected to cost tens of billions of dollars, contributing to persistently high prices.
Damage to infrastructure
Since the start of the conflict in West Asia, more than 150 attacks have targeted energy sites in the region, according to an AFP tally based on data from the US NGO Acled.
Among these, at least 44 infrastructure facilities linked primarily to oil and gas – including depots, refineries, and extraction fields – have suffered damage, as well as a dozen sites related to energy transport.
The cost of repairing and restoring energy infrastructure could already range between $34 billion and $58 billion, according to an estimate by Rystad Energy.
In its most severe scenario, the firm estimates that the bill for oil and gas installations alone could reach $50 billion.
If the ceasefire is not extended or no agreement is reached, “the long-term consequences of the war will be more severe,” Arne Lohmann Rasmussen, an analyst at Global Risk Management, told AFP.
According to Rasmussen, liquefied natural gas (LNG), as well as certain petroleum products such as kerosene and diesel, are particularly vulnerable to shortages.
Persistently high prices
The key to a return to normal production remains the reopening of the Strait of Hormuz, through which approximately 20% of global oil and LNG production transited before the war.
However, even a reopening would not allow for an immediate return of all barrels to the market. “It could take months, if not longer,” said Ole Hansen of Saxo Bank.
The analyst pointed to “disorganised supply chains” and noted that production will not be able to resume until the tanks in which Gulf countries have stored their oil “have been sufficiently emptied.”
Additionally, Hansen highlighted that in seven weeks of war, “the world has lost over 500 million barrels” of oil, which has “tightened the market.” He added that the strategic reserves of importing countries, tapped into during the crisis, will need to be replenished.
According to Hansen, all these factors could “justify a new price floor for oil” of $10 to $15 higher than the pre-war floor of $70 per barrel, meaning a range of $80 to $85.
EU calls to accelerate phase-out of fossil fuels
The energy crisis caused by the war in West Asia must push the EU to accelerate its phase-out of fossil fuels, the European Commission argued on Wednesday, warning of the risk of disruptions for “years to come.”
European Commissioner for Energy Dan Jorgensen warned that this crisis is “probably as serious” as those caused by the 1973 oil shock and the outbreak of the war in Ukraine in 2022 “combined”. According to him, the situation should “serve as a wake-up call, a turning point.”
“Europe must turn its back on its dependence on fossil fuels and commit to the path of autonomy with green energy,” he said during a press conference.
The war in West Asia has already increased the EU’s bill for fossil fuel imports by €24 billion, including for gas and oil.
Repercussions for years
While there is no systemic shortage of kerosene at this stage, anxiety is growing, as 20% of the aviation fuel consumed by the EU usually transited through the Strait of Hormuz.
How much worse could the situation get? According to Brussels, everything depends on the duration of the conflict.
“Even in the best-case scenario, the situation looks rather bleak for the coming months, and the repercussions will be felt for years,” Jorgensen stressed.
