Europe Brief: Shell Boss Warns of Fuel Rationing by April as UK Inflation Hits Black Wednesday Levels
Shell CEO sets a stark timeline: Europe could face fuel rationing within weeks. UK manufacturers report the sharpest cost inflation surge since Black Wednesday in 1992. ECB signals emergency rate hike as early as next month. Brent dips to $98 on peace rumors but the strait remains closed.
Europe woke to two contradictory signals on Tuesday. Oil prices crashed 6% to $98 on rumors of a Trump peace plan for Iran. But Shell's CEO delivered a far grimmer message: Europe could face fuel rationing by April if the Strait of Hormuz remains closed. The market wants peace. The supply chain says prepare for worse.
Commodity snapshot (as of March 25)
- Brent crude: $97.62/barrel (down sharply from $113)
- European gas (TTF): still elevated at ~€52/MWh (vs €30 pre-conflict)
- Gold: $4,405/oz
- UK wholesale gas: 172p/therm (highest since August 2022)
Shell's rationing warning
Shell's chief executive told investors that if the Hormuz closure persists through early April, European fuel supplies will hit critical levels. Europe is particularly exposed because it replaced Russian pipeline gas with LNG imports — and Qatar, a major LNG supplier, lost 17% of its export capacity to Iranian strikes on March 17. That damage will take 3-5 years to repair.
The calculation is straightforward: Europe's LNG storage is adequate through early April, but draw rates are accelerating as Asian buyers compete for the same limited supply. Each additional month of disruption removes about 1.5% of annual global LNG availability. Shell's warning is not speculation — it is arithmetic.
UK: cost inflation worst since 1992
UK manufacturers reported the sharpest rise in cost inflation since Black Wednesday — the 1992 crisis when the pound crashed out of the European Exchange Rate Mechanism. The data from Make UK shows input costs surging across every manufacturing sector, driven by energy, raw materials, and transport.
UK CPI inflation held at 3% in February, but this was measured before the full impact of the Iran conflict. Economists now expect March figures to show a significant jump. The average two-year fixed mortgage rate has already climbed from 4.83% to 5.56% — the highest since September 2024.
Food inflation is the next shoe to drop. The Institute of Grocery Distribution projects UK food inflation could hit 6.4% across 2026, adding over 150 pounds to the average household's annual grocery bill. The National Farmers' Union warned that cucumber, tomato, and pepper prices will rise within six weeks as greenhouse heating costs surge.
ECB signals rate hike
The European Central Bank signalled it could raise eurozone interest rates "as soon as next month" — a dramatic reversal from the cutting cycle markets had expected. The logic: energy-driven inflation is now a clear and present danger. Mortgage holders across the eurozone should prepare for higher rates by Q3.
This is the worst of both worlds for European consumers: rising prices AND rising borrowing costs. The stagflation scenario that economists warned about is materializing in real time.
Bright spots
The oil price drop — if it holds — provides temporary relief. Brent at $98 is still 45% above pre-conflict levels, but it is well below the $119 spike from last week. If Trump's peace plan gains any traction, markets will move fast.
The UK government is reviewing North Sea oil and gas production. Green energy executives — somewhat surprisingly — are supporting increased production from existing sites as a bridge measure. Pragmatism is winning over ideology, at least temporarily.
What to watch
Trump's Friday deadline. ECB's next statement. UK March inflation data (due mid-April). And most critically, whether Shell's April rationing timeline proves accurate. European drivers should fill their tanks before the weekend.
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