Financial Group analyst Sergey Kaufman told TASS that disruptions to the supply of liquefied natural gas (LNG) from Persian Gulf countries due to the closure of the Strait of Hormuz, even in just a few months, could push gas prices in Europe above 600 USD/1,000m3.
The Strait of Hormuz is an important oil and gas export route, connecting the Persian Gulf with the Gulf of Oman and further into the Indian Ocean, where a significant part of the global oil and LNG supply passes through. The Financial Times previously reported that large ship traffic through the Strait of Hormuz has almost stalled.
In our opinion, even closing the strait for 1-2 months could push gas prices in Europe up to 600 USD/1,000m3, because competition for available volumes will increase significantly," Mr. Kaufman said.
The closure of the Strait of Hormuz will affect more than 20% of global LNG exports, but countries and territories in Asia such as China, South Korea, India, and Taiwan (China) will suffer heavier losses, because they receive more than 80% of Qatar's LNG exports. This expert also does not rule out the possibility that Iran will directly attack production facilities in Qatar and the UAE.
Meanwhile, gas prices in Europe have exceeded the 500 USD mark because Qatar temporarily stopped LNG production due to Iranian airstrikes.
First of all, the current conflict may affect the global gas market through potential difficulties for Qatar, a country in the top 3 LNG exporters. Qatar transports LNG through the Strait of Hormuz and the risk of closing this strait is the main factor leading to the current price increase. The UAE is also a less important LNG exporter. Current developments may also cause Israel to temporarily stop exporting gas to Egypt or Iran to Turkey" - Mr. Kaufman emphasized.
Many things will depend on the time and intensity of the conflict. Mr. Kaufman pointed out that the complete closure of the Strait of Hormuz will cause opposition even from countries that are friendly to Iran and receive Iranian hydrocarbons through this route.
The US and Israel launched a large-scale attack on Iran on February 28. Major Iranian cities, including Tehran, were attacked. The attack killed Iran's Supreme Leader Ayatollah Ali Khamenei and several other senior figures in the leadership of the Islamic Republic.
The Iranian Islamic Revolutionary Guard Corps has announced a retaliatory operation targeting targets in Israel. US military bases in Bahrain, Jordan, Qatar, Kuwait, UAE and Saudi Arabia were also attacked.
