Iran will complicate Europe's gas "divorce" from Russia

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, gave a detailed interview to the Ura.ru internet portal on the prospects for the global oil and gas market and Russian oil and gas exports in the context of the Gulf war.

— How has the conflict in the Middle East, which escalated on February 28, affected the global gas market? How critical are the restrictions in the Strait of Hormuz and the LNG plants shutdown in Qatar?

— This is a shock for the global LNG market — nothing like this has happened before. Unlike the global oil market, which experienced two oil shocks in the 70s, the "tanker war" in the Persian Gulf in the 80s and many other geopolitical shocks, the LNG market has lived more or less calmly all these decades. All the geopolitical problems related to gas were mainly related to pipeline exports, primarily from Russia to Europe.

The Middle Eastern suppliers of liquefied natural gas — Qatar, the United Arab Emirates and Oman — were considered the most reliable and stable in the world. And the fact that this picture has collapsed at once has become a shock. Therefore, the dynamics of gas price growth since February 27 has been several times more pronounced than for oil.

Moreover, the Iranian factor was not included in the cost of LNG in advance – no one assumed that this political crisis would affect the supply of not only oil and petroleum products, but also liquefied natural gas.

— Why did oil react poorly to the events in the Middle East at first, and only then did the price rise accelerate, while the jump in gas prices occurred immediately?

— Unlike the oil and petroleum products market, the LNG one has incomparably fewer reserves. The International Energy Agency's standard for oil and petroleum products reserves is at least 90 days. The volume of liquefied natural gas stored in terminals and tankers is purely technological in nature and covers only a few days of supply.

— What impact can the Middle East events have on the Russian gas industry and the demand for Russian fuel?

— From the point of view of price dynamics in both Europe and Asia, this is an undoubted plus for Russia. True, events in the LNG market have little effect on rising prices for Russian gas, but they are influenced by rising oil prices, because the main prices under Russian gas contracts are now somehow tied to the cost of oil. And in the medium term, rising oil prices are a more significant price factor. But in the short term, of course, the rise in spot prices, especially in Europe, will lead to an increase in revenue.

At the same time, I think the events in the Persian Gulf will not seriously affect the volume of Russian supplies, because Russia has few opportunities to increase exports.