Financial markets reacted enthusiastically to the temporary ceasefire on Wednesday. But experts warn that it will take months, and possibly years, for energy supplies from the Persian Gulf to return to previous levels. Moreover, Iran is “in no hurry.”
Oil and gas market disrupted
“Compare those two passing ships to the 135 that normally pass through the Strait,” says Hans van Cleef, head of energy research at the consulting firm EqoLibrium. “Even if the number increases, it will take weeks for them to reach their destination.” He therefore does not expect the energy shortages to be resolved anytime soon. According to Van Cleef, the fact that oil and gas prices fell sharply on Monday is mainly because some of the speculation on even higher prices has evaporated. “However, the physical oil and gas market will remain disrupted for months and possibly years,” he states.
Liquefied natural gas (LNG) from the region remains scarce, as some facilities have been severely damaged by Iranian attacks. In the worst-case scenario, repairs could take years. For this year, a further drop in gas prices had actually been anticipated, as Qatar and the United States were expected to produce much more LNG. The U.S. is still expanding production, but according to Van Cleef, the additional American LNG is not enough to fill the gap created in Qatar.
Read the full interview here.