Europe Pays the High Cost of Gas Amid Middle East Tensions
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Salma Hossein
- . October 19, 2023
- . Update: October 19, 2023 3:49 pm
Geopolitical tensions in the Middle East have sent the European market reeling because of climbing natural gas prices. Middle East is the world center for oil and gas. Chaos in the region spreads fear in energy markets and rocket prices.
The Israel-Hamas war in Gaza, Palestine has put markets and Western countries on the edge. It could potentially spark a broader conflict in the Middle East, and hit oil and gas production hard. Things haven’t been easy since October 7.
United Nations Secretary-General Antonio Guterres warned that we are on the verge of the abyss in the Middle East, while Iran heightened fears warning that Tehran will not simply stay an observer of the crisis if the Zionist aggressions do not stop.
Gas Supplies Will be Disrupted
Hitesh Jain, a lead analyst at Yes Securities, said gas supplies would be disrupted if the Israel-Hamas war spreads to I”ran or any other Middle Eastern country. “A lot of risk is involved as the Middle East has the maritime route through which a lot of commodities pass. And if Egypt gets involved then there is the Suez Canal.”He said the price of natural gas has been moving up as the market considers the risks involved. The risks haven’t materialized yet but are likely.
But uncertainty began before the Israel-Hamas war. It started after Chevron Corp stopped production at its offshore Tamar natural gas field near Israel’s northern coast. According to Chevron, the Tamar field holds more than 300 billion cubic metres of gas – this is equivalent of the annual European natural gas imports, and provides about 70 percent of Israel’s energy needs for power generation.
Moreover, Chevron Corp’s liquefied natural gas facilities workers in Australia are on a strike. This also led to the spike in European gas prices.
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Deter Future Investments in Oil and Gas Industry
A recent report by Goldman Sach cautioned about the Israel-Hamas war’s possible repercussions on the global oil and gas industry. There might be a proactive production increment by key players, such as Saudi Arabia, and this could prompt further fluctuations in the energy market. The report stated that European gas prices have been trending upward, because of concerns over the duration of the gas production disruption and geopolitical ramifications of the ongoing Middle East conflict.
