Mideast tensions pose major market risks, harking back to past crises
Rising Mideast geopolitical tensions have highlighted oil and gas sector vulnerabilities. While markets have weathered recent Red Sea disruptions, a Strait of Hormuz closure would have much greater impact. The parallel disruption of both strategic waterways remains a “black swan” event, but such disturbances have occurred in the past – with major and enduring impacts on energy policy and global markets.
In this special Risk Research report, Energy Intelligence analyzes the potential impacts of this “nightmare scenario” for oil and gas markets. Alternative transit routes, strategic and commercial stocks, and spare production capacity are among the key tools available to help mitigate disruption. But these market adjustment mechanisms would go only so far, especially in the event of a deep and sustained disruption. In a worst-case scenario, oil prices could climb to the $150/bbl to $200/bbl range. In gas, the market disruption would be equivalent to the immediate aftermath of Russia’s invasion of Ukraine.
Economies around the world would be rocked by higher energy costs and knock-on impacts, with political and social consequences. Vulnerabilities would vary among producer and consumer countries, with economic and fiscal health, oil dependency and alternative supply routes as key signposts. But even those better positioned would feel severe pressure at a time when they are still recovering from the pandemic hangover.
Learn more about Mideast Energy Supply: The Risks of Disruption – and our Risk Service – in the full report download.
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The Mideast Energy Supply: This Risks of Disruption report was produced by Energy Intelligence’s Risk Service, which helps clients assess the risks and opportunities at the nexus of energy, politics and the low-carbon transition. We deliver a combination of news, analysis, data and research to help clients secure new investment opportunities and mitigate traditional and emerging aboveground risks.
