Oil touching the psychologically important USD 100 per-barrel mark is looking more possible with each passing day, with JPMorgan Chase & Co analysts warning in a note that Gulf producers only have 25 days before they run out of storage space. Wood Mackenzie said in a note that prices could exceed the USD 100 mark “if tanker flows are not quickly restored,” while Bernstein sees Brent crude reaching USD 150 in the event of a prolonged conflict.

Adding urgency to the warning was a drone strike on Aramco’s Ras Tanura facilities, which halted operations at Saudi Arabia’s largest oil refinery in what appears to be the first direct strike on oil infrastructure in this round of hostilities.

The situation “has already moved from geopolitical noise to actual impact,” Rabobank Energy Strategist Florence Schmit tells EnterpriseAM, as energy infrastructure across the region has been targeted and Israel has already curtailed gas production as a precaution.

With the Hormuz Strait effectively closed, there are few other options to get output to global markets, with the Saudi East-West pipeline moving 5 mn bbl / d — equivalent to just a quarter of what usually passes through the strait.

The cost of LNG and our reliance on it also moved up policymakers’ worry list after QatarEnergy announced yesterday it has stopped producing LNG. The decision came after an Iranian drone hit Ras Laffan, the world’s largest export facility, which produces some 20% of global supply.

As disruptions continue, the mismatch between demand and supply could send prices upward. “It’s a matter of the duration of this crisis,” Wideangle LNG Consulting Director Jean-Christian Heintz tells us. “As a rule of thumb, if we are talking about one week of shortage, you see that this already translates into 2% of annual LNG production.”

LNG flow disruptions are expected to “reignite competition between Asia and Europe for available cargoes,” according to Wood Mackenzie Gas and LNG Research Vice President Massimo Di Odoardo.

Israel is making things worse for us: Its decision to cut off gas supplies to Egypt will pile on pressure at the same time as the 24 LNG shipments from QatarEnergy we have scheduled for the summer are uncertain. That could push the Madbouly government to try to secure additional LNG shipments — likely at much higher prices than it had originally penciled in.

Shipping rates for all types of goods and the end-cost for consumers are also set to rise, with shipping lines facing higher fuel costs — which usually account for 40% of total costs — and war-risk premiums doubling to 0.5% coming on top of a 15-20 days longer transit around the Cape of Good Hope while lines avoid the Suez Canal. There are also limited overland corridors able to handle anywhere near the amount of TEU capacity and diverted traffic.

Why it matters: The disruption is an immediate and unbudgeted inflationary shock. The doubling of war-risk premiums for shipping and the extension of transit times mean that the landed cost of everything from grain to industrial components is set to spike. For the Madbouly government, the crisis creates a pincer move: we’re bidding on the expensive global spot market for LNG to keep the lights on, even as Suez Canal revenues face a sustained hit from diverted traffic.

To keep energy supplies stable, the Oil Ministry is working to import three mazut shipments to make up for a shortfall in Israeli gas, a government official tells EnterpriseAM. Plans are also underway to diversify power generation by relying on both fuel oil and natural gas to keep stations running, our source added.

No gas is leaving Idku: The state has pressed pause on LNG shipments flowing out of the Idku liquefaction facility, Asharq Business reports, citing what it says is an unnamed government official. Shell and Petronas usually receive some 350 mmcf/d of LNG for export from the Idku facility, the source said, adding that the last shipment out of Idku was at the end of February.

A precautionary move: A government crisis committee has suspended natural gas export approvals for Shell, Petronas, and Eni through April, prioritizing domestic energy security, a senior government official told us, noting that further steps to safeguard foreign exchange markets and tighten regulatory oversight are also expected.

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