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41 min ago 4 min read
Just weeks after hopes of a appeared to ease concerns over the Strait of Hormuz, renewed US strikes and Iranian retaliation have once again placed the Middle East – and the global industrial gas market – on uncertain footing.
For the gas sector, the latest escalation does more than reignite geopolitical tensions.
It also adds potency to warnings shared at gasworld’s Specialty Gas Summit in Frankfurt last month, where geopolitical analyst Megan Sutcliffe at Sibylline and helium consultant Phil Kornbluth outlined how an escalation can .
Kornbluth outlined “less optimistic” scenarios where the US and Iran stalemate continues, LNG and helium production remain closed, allocations continue, and prices rise by 25 to 50%.
“A pessimistic scenario is the conflict restarts, Ras Laffan endures more damage and storage caverns eventually deplete. The allocations continue though they get worse because the shortage level increases,” he said.
“Prices return to greater, or equal to, where they were in helium shortage 4.0 – so that’s a nasty scenario. The ‘recurring black swans’ – be they or geopolitical events – are the most likely scenario.”
Another scenario he outlined was ‘a race to the bottom’, in which pipeline projects proceed without any restraint. “Then we end up with capacity utilisation in the market dropping below 80%,” he said.
Another complicating factor is the Russian government announcing .
“There’s still a lot of uncertainty about these export controls, and what they really mean for the longer term … we’re seeing an extra 10 to 15% of supply removed. It’s thrown oil on the fire.”
While both speakers believed the most likely outcome was not a prolonged regional war, but a fragile cycle of escalation, diplomacy and renewed confrontation that would continue to cast uncertainty over energy and industrial gas markets.
And given the current re-escalation, that scenario now appears increasingly pertinent. At the end of June, reports emerged of the but the latest resumption of hostilities casts fresh doubts.
Sutcliffe outlined the heightened risks from the resumption of hostilities – which has been underlined by an attack on a this week.
“The hinge point is the reopening of the Strait of Hormuz,” she said.
“It is the most central part of this conflict to global business activity. Iran is likely to continue requiring extensive disclosures of vessel ownership, and they could periodically tighten their grip to enforce soft closures during periods of diplomatic tensions. It’s a very diverse risk picture.”
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She said that the most likely outcome was not an immediate return to full-scale conflict, but a period of “managed escalation” in which military exchanges continued below the threshold of all-out war while negotiations carried on behind the scenes.
She also warned against interpreting a lull in fighting as a lasting return to stability.
“It is very easy to slide into de-sensitisation,” she said. “Anything less than that feels relatively peaceful … it is very clear that all parties in the region are seemingly testing the definition of a ceasefire.”
Clearing the mines in the strait is not going to happen quickly, she added, echoing , and warned that it will take “weeks if not months” for supply chains to where they were on 27 February, before the war started.
She remains hopeful that the “most likely scenario” is some form of diplomatic breakthrough is found, but acknowledged the prospect of long-term downside risk is acute.
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