Israel’s surprise airstrikes on Iranian nuclear sites have sparked immediate volatility across global energy markets. Oil prices soared on June 13 as traders reacted to fears of further escalation in the region. Dated Brent crude surged to a two-month high of $75.19 per barrel, marking the steepest single-day jump in nearly five years, according to Platts, part of S&P Global Commodity Insights. Middle East sour crude benchmarks also rose sharply, with front-month cash Dubai assessed at $72.50 per barrel—up 5.7% from the previous day. Analysts say this reaction remains tied to fears of broader regional unrest. “The attack is obviously bullish near term for oil prices, but the key is whether oil exports will be affected,” said Richard Joswick, head of near-term oil analysis at S&P Global.
Analysts Monitor Risks to Iranian Oil Exports
While current reports confirm no damage to Iran’s energy infrastructure, analysts remain cautious. Joswick warned that a broader Iranian retaliation—especially targeting oil infrastructure or regional shipping—could dramatically raise risk premiums. “If Iranian crude exports are disrupted, Chinese refiners, the sole buyers of Iranian barrels, would need to seek alternative grades from other Middle Eastern countries and Russian crudes,” he explained. He also pointed to the ripple effects such a disruption would have, including higher freight rates, elevated tanker insurance premiums, and a potential narrowing of the Brent-Dubai spread. These developments could squeeze refinery margins, particularly across Asia. In May, Iran pumped 3.25 million barrels per day of crude, but exports dropped below 1.5 million b/d as floating storage rose amid intensifying regional tensions.
Israeli Gas Outages Halt Exports to Egypt and Jordan
The energy conflict has also affected Israeli gas production. The Ministry of Energy confirmed temporary shutdowns at the Leviathan and Karish platforms, which together produce around 1.8 billion cubic feet per day. These facilities supply pipeline gas to Egypt and Jordan—exports totaling 1.2 Bcf/d are now on hold. “The shutdowns are bullish for LNG prices, initially on sentiment, and possibly more if they persist,” said Laurent Ruseckas, Executive Director at S&P Global Commodity Insights. He noted that Egypt and Jordan would need to replace these volumes quickly, likely by turning to global LNG markets. Although infrastructure bottlenecks may prevent an immediate supply gap, prolonged outages could push LNG benchmarks—such as JKM, TTF, and NWE—higher and disrupt normal trade patterns.
LNG Demand Could Rise if Conflict Persists
S&P Global reports that Egypt’s floating storage and regasification unit (FSRU), Hoegh Galleon, is already operating at full capacity at Ain Sokhna. Two additional FSRUs—Energos Eskimo and Energos Power—remain offline for maintenance. If restored quickly and assuming grid readiness, these units could help manage the supply shortfall. Otherwise, Egypt and Jordan might resort to fuel oil use and gas rationing. “To fully replace Israeli pipeline imports, Egypt and Jordan would require another 10-12 LNG cargoes per month,” Ruseckas stated. These added cargoes would intensify competition in global LNG markets, raising procurement costs for Asian and European buyers. Meanwhile, infrastructure limitations could delay the adjustment, forcing regional consumers to make immediate energy substitutions.
trait of Hormuz Emerges as Critical Chokepoint
Analysts stress that the Strait of Hormuz remains a key risk zone in the event of further escalation. Nearly 20% of global LNG and a significant volume of crude oil exports pass through this narrow waterway. “There is a risk to LNG supply if Iran retaliates by threatening shipping through the Strait of Hormuz,” according to analysts at S&P Global Commodity Insights. So far, freight rates for Red Sea transits have held steady, but the region remains sensitive. Ongoing conflict between Houthi rebels and commercial vessels has already cut Red Sea transits by 60% since late 2023, according to Platts tanker tracking data. As Joswick emphasized, “Price risk premiums tend to fade unless actual supply is disrupted.” Yet, markets remain on edge, watching for any move that could tip energy flows into deeper crisis.
(With Input From ANI)
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