To date oil and gas flows from the Middle East remain fairly unaffected – but there are concerns about escalation. The Guardian news explained.
Global oil market prices have climbed for two consecutive weeks since Hamas launched its shock attack on Israeli civilians on 7 October.
The deadly offensive sent tremors through the oil markets, causing prices to climb to $94 (£77) a barrel. It also reignited fears among oil traders and economists that markets could breach the $100 a barrel mark.
Many worry an escalation of tensions in the region could drive oil prices far higher by choking a key transit route for seaborne cargoes of oil and gas from the Middle East to the global market – threatening efforts by central bankers to tame high inflation.
Have oil and gas supplies been affected? Not yet. The recent rise in oil and gas prices has been fuelled by fears that exports from the energy rich region could be disrupted – but to date oil and gas flows from the Middle East have remained relatively unscathed despite the Israeli-Palestinian conflict.
Israel doesn’t have significant oil reserves but after the 7 October attacks the government shut down production at its giant Tamar gasfield off its southern coast. This has limited gas flows to neighbouring Egypt, which typically exports about half of its gas via seaborne tankers, often to Europe.
Despite Europe’s record high levels of gas storage this winter, gas prices have climbed this week after a tanker seeking to fill up liquefied natural gas (LNG) in Egypt left empty and diverted to another port, stoking fears for Europe’s gas supplies.
“There’s no material loss to oil in the markets at the moment,” said Dr Neil Quilliam, an expert in Middle Eastern energy policy and geopolitics at Chatham House. “The one thing that could really shift the price was if the conflict spreads.”