HomeMediaLatest NewsThe impact of the Middle East conflict on the oil and gas market

The impact of the Middle East conflict on the oil and gas market

26 October 2023

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to the Rambler/Finance web portal on the impact of the new Palestinian-Israeli conflict on world hydrocarbon markets.

The only direct consequence of the conflict in the Middle East from the point of view of physical supplies is currently the production shutdown at the Tamar gas field in Israel, the expert noted.

"Its pipeline infrastructure runs along the Gaza Strip and is within range of Hamas rockets. Accordingly, there was a reduction in the supply of Israeli gas to Egypt. And this gas, among other things, is used for the production of LNG. At the same time, Egypt itself last sent LNG for export back in early July, and then, due to rising demand because of hot weather, LNG exports completely stopped, and the resumption of supplies was planned for September-October. And now, apparently, this deadline will be postponed due to insufficient import volumes from Israel. But this is a very local story that only matters in Turkey, which is a major buyer of Egyptian LNG. But Turkey can easily find a replacement for it, so not only in terms of the European LNG market, but also the global market, such a loss is not significant," Belogoryev stressed.

Oil prices are currently reacting "quite calmly" to events in the Middle East, the expert added.

Speaking about gas prices, the expert stressed that "formally, they reacted to the conflict much more strongly."

"Spot indices and futures grew by a third at a number of European hubs, but the question of whether there was a serious influence of the Middle East factor is very debatable. Most likely, the threat of new strikes at Australian LNG plants that existed at that time played a role there. In addition, there was psychological pressure associated with the incident on the Balticconnector gas pipeline. Plus, there was an increase in demand with fairly modest volumes of current imports. That is, internal factors that determine the exchange prices for gas in Europe have affected," he said.

If the vector of development of the Palestinian-Israeli conflict remains the same, then this confrontation will not have a significant impact on the oil and gas market, the expert suggested.
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