The numbers are stark. Since the US military build-up began in the Gulf, Brent crude has jumped about 50 per cent. Asian spot LNG prices have almost doubled. The European natural gas benchmark is up roughly 50 per cent. And energy historian Daniel Yergin warned these figures could get worse.
"Hvylya" reports, citing Yergin's analysis in the Financial Times, that the current oil prices in the $90s are "far from the worst-case scenario." The most difficult outcome would be severe damage to Gulf infrastructure and a lengthy closure of the Strait of Hormuz, which would fuel fears of longer-term supply shortfalls.
The price shock is rippling outward from Asia, where over 80 per cent of Gulf oil and 90 per cent of its LNG were heading before the war. Asian buyers deprived of Qatari cargoes are now bidding aggressively to redirect US LNG, driving up costs for Europe in the process.
Europe and Africa face their own exposure: both regions depend on the Gulf for a substantial part of their jet fuel supply. The longer the war continues, Yergin stressed, the more upward pressure will be applied on prices globally. Shortfalls in Asia will eventually show up at gasoline pumps in North America.
The roots of this crisis, Yergin noted, trace back to strikes by oil workers in Iran in 1978 - the protests that toppled the Shah and created the Islamic republic whose "revolutionary zeal included unending enmity towards the West." Nearly half a century later, the nightmare scenario that flowed from that revolution is closer to reality than ever before.
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