The Middle East energy war is spiralling out of control
🚨 EMERGENCY POD 🎧 Deciphering the wide-ranging implications of unprecedented strikes on energy installations in Iran and Qatar, and the prospect of uncontrolled military escalation
The Trump administration has well and truly lost control of the situation in the Middle East.
Rapid escalatory attacks and destruction of critical energy infrastructure are unfolding on a scale that defies historical comparison.
This spiralling conflict is sowing the seeds of an energy crisis that will dwarf the events of 2021-22.
Israel’s initial unprovoked strike on Iran’s South Pars gas field yesterday triggered huge retaliatory attacks on Qatar.
QatarEnergy CEO Saad al-Kaabi told Reuters this morning that two of Qatar’s 14 LNG trains and one of its two gas-to-liquids (GTL) facilities were damaged in the unprecedented strikes.
The attacks knocked out 12.8 million tons per year (mtpa) of liquefaction capacity, or 17% of Qatar’s LNG supply, for three to five years, he was quoted as saying.
As I reported last night, amid the most extraordinary and shocking scenes, this is energy warfare that goes beyond military escalation.
This is a structural supply shock with cascading consequences for oil, condensate, refined products, LNG and power that energy markets have barely begun to price.
Al-Kaabi said Qatar’s exports of condensate will drop by around 24%, while liquefied petroleum gas (LPG) will fall 13%. Helium output will fall 14%, and naphtha and sulphur will both drop by 6%.
This is truly the worst-case scenario for energy and fuel markets the world over. As usual, the poorest in society stand first in line to bear the brunt of the economic impacts.
Export controls and rationing are already underway in numerous Asian economies. But the scale of supply loss exceeds the ability of governments to manage demand destruction in an orderly fashion.
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