Fuel prices up 29%: IRU report lays bare the crisis facing European operators

The extended ceasefire in Iran and continuing blockade of vessels either side of the Strait of Hormuz is creating a cumulative challenge for road transport operators in the UK and around the world.

Spot crude prices are around 40% above Brent, meaning refineries pay far more than headline prices suggest and the global supply of crude fell by 10% in March, which is double the worst disruption of any previous energy crisis’s.

This 10% reduction equates to approximately 10 million barrels per day, in the 1970’s and 1990’s energy crisis the reduction was 5 million barrels per day which at the time led to long term consequences. During March Iran still exported 3.6 million barrels per day, a figure now stopped due to the US blockade, however with over 80 production sites already damaged since the start of the war, even with a rapid end to hostilities full production could take years to be restored.

Furthermore, the re scheduling of the huge tankers involved in oil supply chains once maritime shipping can resume is expected to impact “normal” supply until well in 2027, again adding negatively to the longer-term picture, it’s becoming clearer that the future operating situation for hauliers will not be the same as it was before the conflict.

The ongoing increasing oil prices and the scale of impact on differing countries is directly related to the supplying country, with France recording the highest rise of the top five EU economies at 34%.

The IRU has been monitoring the impact of the crisis on Europe’s transport operators since the start of the war and its latest findings suggest:
• An average of + 29% fuel price increase across the EU
• Spot rates for intra EU line hauls are up + 8%
• AdBlue costs continue to increase with some supply issues emerging
• Peak inflationary reference estimated at 9.2%
• Maritime (container) rates up + 30 to 50% on certain routes
• Rerouting and near shoring of supply chains may boost road freight demand

The report goes on to suggest how governments can ease the impact on transport operators providing critical services to the economy by:
• Release oil reserves to help stabilise fuel prices
• Reduce fuel taxes, which often represent a large share of the pump price
• Open borders without requiring trailer swaps, simplifying operations and lowering transport costs

Unintended consequences are emerging in some of the countries suffering the highest increases such as the UK and Australia, with road transport operators reaching their fuel card credit limits quickly therefore risking their ability to operate at all.

Fuel theft from both trucks, storage tanks and even garage forecourts is increasing exponentially in all countries. Further consolidation of transport businesses globally makes for challenging times ahead; however transport operators are historically resilient and evolve quickly, there will always be transport and new opportunities will arise.