The escalation of conflict in the Middle East and start of a large-scale military operation against Iran create severe risks for global energy market. Anastasia Levchenko, Researcher of the Industrial Organization and Infrastructure Economics Department at the Gaidar Institute, assessed potential consequences of a possible stoppage of shipping in the region in a commentary for TASS.
According to the expert, markets could face a catastrophic supply shortage. "According to Rystad Energy analysts, if tensions persist and shipping is effectively halted, markets could lose 8-10 million barrels per day, and the price of Brent could jump another $20. A rise above $100 is possible if the blockade is prolonged," noted Anastasia Levchenko.
Analyzing the exchanges' reaction to news of military action, the expert focused on a sharp jump in price quotation. At the opening of trading in London on October 2, the price of May Brent futures rose to $82.37 per barrel, 13% higher than the previous week. "There was an instant correction to $77, but the very fact of the jump reflects the extent of the 'war premium,'" she explained.
Anastasia Levchenko emphasized that current volatility is largely driven by psychological factors. "As long as the threat of strikes on tankers and refineries persists, prices will remain in the $75-$85 range, with the potential to surge into triple-digit territory in case of any provocation," the expert stated.
The expert believes that gas market situation is particularly alarming. Risks are assessed as even more acute due to the vulnerability of Qatar, a key player in the LNG market. "Goldman Sachs experts predict a 130% rise in LNG prices in Asia and Europe amid the month-long blockade of the Strait," Anastasia Levchenko concluded.