Energy supplies were already tight and prices were soaring due to the closure of the Strait of Hormuz, a key shipping channel through which about a fifth of the world’s oil typically flows. But recent strikes on oil and gas infrastructure are exacerbating the problem — and specifically creating issues for global natural gas prices.
“It's having significant impact on prices in Europe and Asia,” said Ira Joseph, global fellow at Columbia University’s Center on Global Energy Policy, referring to natural gas. “It's not really having an impact on U.S. gas prices right now.”
“It's a very big deal,” Joseph added. “It's potentially quite recessionary if this lasts for a considerable period of time.”
On Wednesday, Israel attacked Iran’s South Pars gas field. Afterwards, Iran apparently targeted natural gas infrastructure in Qatar and the United Arab Emirates.
QatarEnergy's CEO and state minister for energy affairs told Reuters this week that Iran’s attack knocked out 17 percent of its export capacity and said repairs could take three to five years.
Qatar is the world’s third largest gas exporter, so the strike could be a significant hit to the global supply.
Gas that would have otherwise flowed to Italy, Belgium, South Korea and China is expected to be affected.
“Now we’re seeing direct attacks on multibillion dollar infrastructure that’s going to take as long as five years to fix. It’s keeping a significant portion of global LNG [liquified natural gas] supplies off the market for a long time. It’s going to be really costly,” said Jim Krane, a fellow in Middle East Energy Studies at Rice University’s Baker Institute.
Read more when the story runs this weekend at TheHill.com.
