The ongoing conflict involving Israel, the U.S., and Iran poses significant threats to global energy markets due to military strikes targeting oil and gas facilities in the Middle East.
The attacks on oil and gas installations in the Middle East are part of the escalating conflict between Israeli and American forces against Iran. Although these strikes may seem like localized military messages, a closer examination reveals that the underlying motives relate to the broader implications for global energy security and the markets' capacity to handle simultaneous shocks in oil and gas supply. The geographical positioning of these attacks and the selected targets suggest a significant international impact extending beyond the immediate regional conflict.
One of the most concerning aspects is the potential closure of the Strait of Hormuz, through which approximately 20% of global oil and about one-fifth of liquefied natural gas (LNG) trade passes. Disruptions in this vital shipping route would not just hinder maritime navigation but pose a severe threat to the global supply structure that sustains worldwide economic activity. Goldman Sachs has issued forecasts indicating that a month-long disruption in shipping through the Strait could lead to dramatic spikes in European gas prices and spot LNG prices in Asia, with an estimated rise of around 130%, reaching $25 per million British thermal units due to currently low geopolitical risk premiums.
