EU looks to tighten grip on jet fuel as Iran war spotlights shortage risks

By Kate Abnett and Joanna Plucinska

BRUSSELS, April 22 (Reuters) - The European Union is considering requiring countries to hold stockpiles of jet fuel, and potentially redistribute it based on regional needs and shortages, Europe's energy policy chief told Reuters on Wednesday, as concerns mount over possible shortages tied to the Iran war.

The European Commission proposed measures on Wednesday to address the energy fallout from the U.S.-Israeli war with Iran, including EU-wide monitoring of refinery output in an effort to maximize capacity.

EU Energy Commissioner Dan Jorgensen told Reuters that the bloc could add rules on jet fuel reserves and even sharing, that would signal a more hands-on approach.

"We will be able to, if necessary, introduce redistribution tools and other things that we don't normally do in this sector," he said in an interview.

"Normally, we let the market decide, but we can end up in a crisis where it is indeed security of supply that is the problem, and not only prices."

EU JET FUEL RESERVE REQUIREMENTS

The EU requires countries to hold 90 days' worth of oil and oil products in reserve, as a buffer against shortages. Countries can include jet fuel in this stockpile, but there is currently no requirement to do so.

The EU has said jet fuel shortages are not currently an issue, but a prolonged blockage of the Strait of Hormuz could lead to longer-term challenges.

The International Energy Agency has forecast shortages by June if Europe can only replace half of the supplies it normally gets from the ​Middle East.

Jorgensen added that he was hopeful there was room to increase European jet fuel refinery output, with the Commission saying that it would work to maximise refinery production and would create a fuel observatory to better map transport fuel supplies and stocks.

Already, a number of European carriers, including TUI TUI1n.DE and easyJet EZJ.L have issued profit warnings on the back of fallout from the war, with many saying their outlooks are uncertain.

Underscoring the wider scramble, the Airline Operators of Nigeria (AON) - an industry body composed of a dozen mainly domestic carriers - was due to meet with the government on Wednesday after threatening to ground planes due to crippling jet fuel prices.

INDUSTRY BACKS PLAN

Airports and airlines supported the plan, which also included efforts to clarify flexibilities in rules on airport slots and public service obligations.

"The plan adopted today is the adequate strategy and response to mitigate potential jet fuel shortage risks, given how uncertain the situation remains over the resumption of the safe and stable passage through the Strait of Hormuz," Olivier Jankovec, the head of Airports Council International Europe, said in a statement.

Airlines for Europe, a trade group representing airlines like Lufthansa LHAG.DE, Ryanair RYA.I and Air France-KLM AIRF.PA, urged swift implementation of the new measures.

"Airlines cannot wait, while jet fuel supply recovery will take weeks," the group said in a statement.