The ​European Union has warned member countries that if the Iran conflict ‌continues, energy markets will face a prolonged supply shock that would force cuts to fuel consumption, EU diplomats told Reuters.

In a ​closed-door meeting with EU countries’ ambassadors, the European Commission said it was considering two ​main scenarios, diplomats with knowledge of the talks said.

In a scenario where the ceasefire agreed between the US and Iran holds, and the US blockade of the strait is ​lifted, oil and gas flows would recover in a few months, and prices should decline, ​the Commission said.

Diesel and jet fuel prices would ease later, by the end of summer, while the ‌global ⁠market for LNG would remain tightened until 2030, due to damage to infrastructure in Qatar, it added.

But if tensions continue, energy markets would face a prolonged supply shock and extreme price spikes, with ripple effects across industries’ supply chains. Continued oil supply disruption would increasingly force “demand destruction” — meaning reduced fuel ​use, the Commission said.

In ⁠this scenario, Europe could struggle to fill its gas storage ahead of winter. Localised shortages of jet fuel are also possible, the ​Commission said, according to the diplomats.