Slovak oil security: Druzhba, Adria, Hormuz and armed conflicts

If the conflict in the Middle East continues to escalate, it is likely to feed through into oil prices on global markets and, in turn, into fuel prices. There may also be challenges with physical deliveries if the Strait of Hormuz remains constrained for a longer period. A significant share of global oil trade passes through this corridor.

Less oil on the market = less oil on tankers = less oil in refineries = allocation, restrictions and campaigns along the lines of “please drive less, thank you”.

The situation in Slovakia has its own specifics. Since the end of January, flows of Russian crude to Slovakia via the Druzhba pipeline have been interrupted. The shortfall is currently being covered by crude from the Middle East via the Adria pipeline, and Slovakia has drawn on state emergency reserves to bridge the interim period.

In that case, both the oil price on the exchange and access to supply would be important. In a prolonged conflict, it may become decisive who can secure deliveries at all. Long-term contracts and strong market players will typically be prioritised. The rest of the world may have to “drive in an energy-conscious way”, simply because there may be no alternative.

Energy security could become even more tangled, and quickly.