Natural gas hit harder by Hormuz closure — oil finds a way around

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WHAT WE’RE TRACKING TODAY

TODAY: War traps natgas, oil finds a way out

Good morning, friends. We’re heading into the weekend with a balanced read. The Iran war is reshaping energy markets in less obvious ways, with natural gas — not oil — taking the bigger hit as supply tightens and agreements get harder to strike. Hormuz disruptions are also starting to squeeze jet fuel flows, and airlines are already feeling it — but the question is, how long can operations hold if the supply crunch deepens?

The big story abroad

Washington maintains that peace talks with Iran are ongoing, despite Tehran roundly rejecting the ceasefire proposal put forward by the Trump administration. The Islamic Republic is reportedly looking to secure assurances that the US-Israeli assault will not resume, reparations for war-related damage, and recognition of its authority over the Strait of Hormuz.

From the Dept. of Ongoing Disruptions

EVENTS — Plans put on hold: Dubai’s Marine Money event — originally scheduled for 26 March — has been postponed in light of recent developments in the region. No new date has been announced by the organizers yet.

Watch this space

LNG — Qatar’s LNG disruption is now spilling into contracts: QatarEnergy said it needs to declare force majeure on some affected long-term LNG contracts — including buyers from Italy, Belgium, South Korea, and China.

The physical hit was already severe: Two LNG trains at Ras Laffan are offline after Iranian strikes took around 12.8 mtpa out of commission, roughly 17% of Qatar’s LNG export capacity. Qatar’s share in the market makes it especially hard to absorb, since it’s the world’s second biggest exporter of LNG.

Can Algeria fill Qatar’s shoes? Italian Prime Minister Giorgia Meloni is looking to Algeria for substitute gas supplies after Qatar’s force majeure affected its LNG contract with Italy. Qatar accounted for about 33% of Italy’s LNG imports last year.

Why Algeria? It’s the fastest pipe option Italy knows how to use. Algeria is already Italy’s main gas supplier, covering around 36% of annual gas needs last year, with flows anchored by the TransMed pipeline. The two parties signed a fresh batch of agreements last July worth some EUR 14 bn, including in energy.

Algeria may be the logical substitute, but not an unlimited one. Analysts have flagged that Algeria may have trouble meeting demand as its domestic demand rises. Rome is also talking to the US and Azerbaijan instead of relying on Algeria as a full replacement.

M&As — Canada’s pipeline push is starting to pull Gulf capital into the room. Middle Eastern sovereign funds and Asian investors have shown early-stage interest in taking minority stakes in a proposed 1 mn bpd crude pipeline to British Columbia’s northwest coast, ahead of a planned federal fast-track request in June, Reuters reports, citing comments by Alberta Premier Danielle Smith. The project remains uncommitted, but reflects Canada’s efforts to diversify exports toward Asia and away from the US, which still takes around 90% of its crude exports.

Why now? The war has increased the strategic value of oil and gas supplies that bypass the Strait of Hormuz, as disruptions there tighten global markets. At CERAWeek, Alberta is positioning itself as a secure and geopolitically stable energy supplier, just as higher prices and supply risks boost demand for Canadian exports.

At the same time, both Ottawa and Alberta are working to accelerate project approvals and expand export infrastructure, particularly pipelines to the Pacific Coast. This creates a chance for Middle Eastern investors to diversify geographically, gaining exposure to stable North American production while reducing reliance on Hormuz-linked export routes.

ENERGY — Japan is moving deeper into emergency mode. Tokyo will start releasing crude from its national reserves today, while releases from joint stockpiles held with producing nations are scheduled by the end of March, Prime Minister Sanae Takaichi said in a post on X. The move will take Japan’s total contribution to the International Energy Agency emergency release to nearly 80 mn barrels of crude, as the Hormuz disruption keeps pressing on Asian importers.

Asia feeling the pressure: Missing Gulf barrels hurt Asia first, and the fallback options are weak. Alternative supply from Brazil, West Africa, and North America can soften the blow, but would not close the gap, especially once buyers start competing for cargoes that take longer to ship and often do not match Gulf crude quality.

Market watch

Oil prices rose over USD 1 per barrel this morning — rebounding as prolonged Middle East tensions threaten energy flows, Reuters reports. Brent crude futures gained USD 1.65 to USD 103.87 / bbl by 04.24 GMT, while US West Texas Intermediate (WTI) increased USD 1.49 to USD 91.81 / bbl.

The Baltic Index breaks losing streak: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — increased 0.7% to 2,001 points on Wednesday. The capesize gained 2.5% to 2,915 points, while the panamax index slipped 2.6% to 1,796. The smaller supramax declined 0.6% to 1,208 points.

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What looks like a symmetric shock is anything but

A stress test that gas is failing: The regional disruptions may be hitting oil and gas at the same time, but the fallout is diverging fast — one can reroute, while the other can’t. Oil is bending around the shock, while gas is absorbing it — with little room to maneuver.

Oil has optionality, gas has constraints: Crude can shift across pipelines, tankers, and storage with relative ease, while gas is structurally less forgiving — fewer routes, tighter logistics, and thinner buffers. The global LNG system depends on fixed liquefaction, shipping, and regasification capacity, with limited room to improvise when flows are hit. And unlike oil, gas markets lack any comparable strategic reserve or quick supply response to stabilize conditions.

Gas moves through two channels — pipelines or supercooled cargoes — and both come with limitations. Pipeline trade is the simplest and cheapest, but only works between connected neighbors with fixed infrastructure, while cargoes move gas in superchilled LNG — a process that depends on expensive liquefaction plants on the export side and regasification import terminals on the receiving end.

Limited pipes, limited options

Our region’s gas network runs through a handful of fixed corridors — Qatar’s Dolphin pipeline into the UAE and Oman; Iranian exports feeding Iraq and linking to Turkey; and the Arab Gas Pipeline connecting Egypt to Jordan and the Levant. nt. Rather than a unified network, the region’s gas trade consists of fragmented, bilateral systems shaped by political and commercial ties.

It also ultimately comes down to response time: LNG export terminals are capital-intensive, technically complex, and slow to repair once damaged or shut. Oil refineries and export systems, by comparison, are faster to restart — evident in refinery turnarounds.

The asymmetry is in the fleet: War risk premiums and higher tanker rates are rising for both oil and gas, but LNG carriers face a more constrained market, with fewer vessels and less rerouting flexibility. The global oil tanker fleet numbers some 12k vessels, compared to roughly 700-800 LNG carriers.

Markets are already pricing that gap: European and Asian gas benchmarks have outpaced crude since the conflict began, signaling a longer recovery curve. Earlier this month, in the first reactions to the disruptions, Brent futures rose 8%, while the TTF was trading up by 19%. Oil prices rose by some 40% since January, with natural gas contracts up by around 80%.

Spot demand is a source of tension, with Europe and Asia bidding against each other for the same flexible cargoes, sending prices soaring. Import-dependent buyers without long-term cover will feel it first, and as demand rises, sellers will face a simple calculation — honor a lower-priced long-term contract or pay the penalty and capture a fatter margin in the spot market.

The loss of volume to the energy market creates an imbalance of supply and demand, specifically for Asian consumers, founder of JHT consulting and former VP and Managing Director for Black & Veatch Javid Talib tells EnterpriseAM.

The market demand will get tempered, since there is no immediate replacement for the lost volume coming online, Talib tells us, noting that the supply side of the market will be rebalancing their available short term/spot volume distribution to take advantage of higher LNG pricing.

Timing made things worse

Gas walked into the shock already stretched: Global gas demand has been growing faster than oil over the past decade — demand for oil rose by 0.8% in 2024 compared to 2.7% for natural gas — driven by rising power demand. LNG demand alone is expected to rise from 422 mn tons in 2025 to some 650-710 mn tons by 2040 — a 54-68% rise — with Asia driving around 70% of that growth, according to Shell.

The LNG market has limited short-term swing supply. New liquefaction projects in the US and elsewhere are ramping up, but they cannot instantly offset a large Gulf disruption. New projects usually take four to five years from final investment decision to completion.

Storage is where gas loses the game outright

From a logistics standpoint, oil can be stored almost anywhere — in tanks on land or tankers at sea, which can double as floating storage when needed. Gas is far less flexible: it has to be compressed, and even in liquid form, storage depends on specialized vessels and infrastructure, which limits storage locations and pushes costs higher.

That constraint kills flexibility just when you need it most: Oil traders can build buffers and release them when flows tighten. On the other hand, gas markets operate closer to the edge — disruptions hit consumption faster because there’s less stored volume to smooth the shock.

Seasonality adds another layer of fragility: Gas demand swings sharply — rising in winter in Europe and in summer in the Middle East, with weaker demand in the shoulder seasons — making storage timing harder and riskier. Oil demand is flatter, giving storage operators more predictable turnover.

This mismatch makes gas harder to hedge and stabilize: Oil markets can cycle inventory throughout the year, providing flexibility, while gas storage depends heavily on seasonal timing. When disruption hits off-cycle, the system has fewer shock absorbers.

Gulf oil finds a way — gas has no exit

Oil is already adapting — pipelines and rerouting are kicking in. Major Middle East producers such as Saudi Arabia and the UAE are shifting flows to ports outside Hormuz — Yanbu via the East-West pipeline and Fujairah via the Habshan-Fujairah pipeline — moving even as maritime risks rise. It’s not seamless, but it works.

Gas doesn’t have that escape valve: There’s no pipeline workaround at scale for lost LNG volumes, and disruptions to Qatari exports ripple straight through the global supply chain.

What’s next?

Even a ceasefire wouldn’t reset gas quickly: LNG infrastructure takes years to repair — QatarEnergy’s CEO estimated repairs to damaged LNG capacity will take three to five years — and buyers that start diversifying away don’t snap back quickly.

The result: Some markets, especially cost-sensitive ones, will rethink how much gas they want in their energy mix — countries across Asia are already ramping up coal-fired generation. The industry that was scaling up demand may now find that demand doesn’t come back. However, “diversification away from gas is going to take decades,” Talib said.

This is a wakeup call to the importers of LNG, Talib told us, noting that the geopolitical risks in the Arabian Gulf strengthen the strategic value of sourcing LNG from elsewhere like the US, Canada, and Argentina.

No fuel, no flying

Is there enough fuel to fly? Jet fuel prices have doubled in recent weeks as the closure of Hormuz cuts a significant chunk of global supply, as Kuwait and the UAE are among the top three global exporters of jet fuel. Flight ticket prices have already started rising, but the real shock may be yet to come, with some airlines warning that jet fuel reserves at some airports could run out in a matter of weeks.

The imbalance is already clear: African carriers are already carrying a heavier fuel burden than global peers, and the war has exposed how quickly jet fuel supply chains can tighten once regional flows come under pressure. For Egypt, the question is no longer just about costs, but whether operations can be sustained if the squeeze drags on.

Egypt’s fuel buffer: Resilience or illusion?

So far jet fuel reserves in Egypt are at safe levels, government officials tell EnterpriseAM. They relayed that there were no issues in terms of aviation fuel shortages.

But how deep does that buffer really run? Industry insiders have their worries. “Egypt is not well protected in a prolonged disruption because it relies on imported oil,” warns Avaero Capital Partners Principal Managing Partner Sindy Foster in comments to EnterpriseAM. This reliance in times of stress becomes an issue because flows may not always be consistently available, which does not work well with the aviation industry’s need for “high-volume, continuous, and reliably financed supply,” she explained.

The real risk: financial sustainability

Availability is only half of the story: A prolonged disruption would not only test the availability of fuel, but also whether airlines can continue securing and paying for jet fuel at scale. For Egypt, “the real economic risk is sustainability. Over time, this becomes a question of whether airlines can secure and pay for fuel at scale, in foreign currency, without eroding already thin margins,” Foster adds.

Where the pressure lands first

The first fault line is fares and margins: Jet fuel now accounts for 30% to 40% of African airline operating costs, compared to the global average of 20% to 25% — and at some low-cost carriers, it is reaching 50% to 55% of direct operating costs.

Fuel stress will push network decisions: “For African and Egyptian carriers, the immediate pressure from higher fuel costs is as much about network economics as it is about pricing — longer routings and fuel burn force airlines to rethink which city pairs remain viable,” Richard Maslen, head of analysis at the Center for Aviation, told EnterpriseAM.

“Fares will inevitably rise, but the perishable nature of a seat means pricing can only stretch so far,” Maslen adds, “so airlines are more likely to balance modest fare increases with tighter capacity discipline, fuel surcharges, and refined yield management rather than relying on price alone.”

The next strain will show up in operations: “What fuel pressure does is tighten an already stressed system. If supply becomes less reliable, airlines cannot operate schedules exactly as planned. That leads to delays, payload restrictions, route adjustments, and selective cancellations, particularly on weaker routes,” Foster notes.

A fuel shock would turn Egypt’s aviation market into a hierarchy test. “A prolonged jet fuel squeeze therefore feeds directly into utilization and network design — marginal routes are trimmed, frequencies adjusted, and aircraft redeployed to stronger flows,” Maslen said. This could leave lower-cost and smaller carriers more exposed early as their model depends on tight margins and high utilization, so they have far less room to absorb fuel disruption or inefficiency.

Do flag carriers hold up better? Airlines like EgyptAir may buy more time, but it doesn’t change the math of a fuel strain. “It pressures everyone and there are no real winners in a fuel supply squeeze — even a state-backed airline still faces fuel access constraints, higher costs, foreign currency pressure, and demand risk,” Foster said

No one is spared: The fuel crunch would hit all airlines — with some carriers likely holding up longer than others, the dominant dynamic is market-wide margin compression rather than differentiation, driven by higher fuel costs, foreign-currency pressures, and demand risk, Foster argues.

Scrambling for alternatives

Shortages are understandably increasing attention on planned sustainable aviation fuel projects, which the government is now trying to accelerate by fast-tracking the timelines for some of the projects, another government official told us. To feed these planned projects, a set of incentives to help make used cooking oil collection projects more financially viable and collect 1 mn tons annually is being prepared, Waste Management Regulatory Authority Chairman Yasser Abdullah tells us.

A reshaped map if the crisis drags on

If the regional war continues, African carriers and hubs could find room to capture traffic flows that have historically bypassed the continent, Maslen added. Addis Ababa is already well placed to deepen its role as a pan-African gateway, while Kigali could become more relevant over time as new infrastructure comes online — which means the Iran crisis could end up reshaping traffic flows, not just fuel bills, he notes.

Dammam launches Bahrain shuttle service + Jazeera Airways opens Saudi cargo corridor to Kuwait

Dammam gets new Bahrain shipping service

Saudi Arabia adds Bahrain shuttle link: The Saudi Ports Authority (Mawani) has launched a new maritime link between King Abdulaziz Port in Dammam and Bahrain’s Khalifa Bin Salman Port through MSC’s Gulf Shuttle service. The route offers a capacity of up to 3k TEUs and gives Gulf cargo another short-sea option as conflict-related disruption continues.

The Bahrain shuttle is not a first. Mawani added another MSC Gulf Shuttle service at Dammam last week with links to Sharjah, Abu Dhabi, and Umm Qasr, with a handling capacity of up to 3k TEUs.

Jazeera Airways routes cargo into Kuwait via Qaisumah airport

Jazeera builds a Saudi detour into Kuwait: Jazeera Airways has opened a supply corridor into Kuwait via Saudi Arabia's Qaisumah Airport — moving an initial 4.5-ton shipment of fresh fruits and vegetables from India to the Kuwaiti market through a multimodal setup.

Can Africa hold the bunker shift?

The bypass becomes the blueprint? Africa’s refuelling hubs are capturing rising demand as container lines reroute around the Cape of Good Hope instead of transiting the Suez Canal and Bab el-Mandeb. Shipping giants — including Maersk, Hapag-Lloyd, and CMA CGM — have all shifted vessels to the longer southern route as Middle East tensions deepen and disruption in Hormuz persists. The key takeaway is the transition from contingency to operating model.

Why it matters

Africa shifting from fallback to lever in global shipping: Gulf refuelling has turned into a distinct risk layer for fleets reliant on Fujairah, Jebel Ali, and Ras Tanura, with prices across major bunkering hubs having already doubled since the Hormuz closure. This opens a window for African ports to lock in traffic, but only if they can secure supply and translate geography into reliable service.

Detour turns into a demand engine?

The Cape route is reshaping bunkering economies: Diversions around the Cape were up 112% by early March, reinforcing what carriers now describe as a “new operational reality” rather than a temporary shift.

….but the cost is heavy: The longer route adds roughly 15 to 20 days to transit times, while war-risk premiums have jumped sharply to around 3% to 5% of vessel value, turning fuel access into a margin issue rather than just an operational detail.

Upside meets constraints

Supply tightens as demand builds: The Cape reroute is lifting African bunkering demand, but the gains are coming with tighter supply and higher prices rather than easy upside. Mauritius’ Port Louis is seeing strong demand alongside elevated HSFO and VLSFO prices and extended lead times, while Namibia's Walvis Bay is also running tight as supply is quickly absorbed. West Africa is experiencing firmer demand as well, though congestion and infrastructure constraints continue to cap how much additional traffic the region can handle.

Even South Africa feels the limits: Despite its geographical advantage, South Africa has struggled to capture the upside cleanly. The country’s bunker volumes fell to around 80k tons a month in 2024 from about 130k tons a month in 2023 after regulatory and tax disputes weakened Algoa Bay’s position. South Africa’s Astron Energy has been trying to restore bunkering capacity after the seizure of a vessel and its fuel cargo hit operations, while Algoa bay’s disruption pushed business toward rivals including Mauritius.

Demand is moving faster than capacity

The upside is clear — more vessel calls translates to higher bunker sales, expanded marine services, and a larger role for ports along the Cape corridor. The constraint is execution — with piracy risks, congestion at Ghana’s Port of Tema, infrastructure gaps, and fuel supply uncertainty limiting how much of that demand can be turned into reliable business. The same pressure emerged during the previous Red Sea rerouting wave in 2023, when traffic moved south faster than African ports could fully absorb it.

Calendar

APRIL

12-15 April (Sunday-Wednesday): Saudi Smart Logistics, Riyadh, Saudi Arabia.

16-17 April (Thursday-Friday): Global Supply Chain and Logistics Summit, Amsterdam, The Netherlands.

23-24 April (Thursday-Friday): Sustainability World Summit, Frankfurt, Germany.

28-30 April (Tuesday-Thursday): Mediterranean Ports and Logistics, Porto, Portugal.

MAY

12-14 May (Tuesday-Thursday): The Airport Show, Dubai, UAE.

12-14 May (Tuesday-Thursday): Aviation Energy Forum (AEF), Paris, France.

12-14 May (Tuesday-Thursday): Seamless Middle East, Dubai, UAE.

19-21 May (Tuesday-Thursday): Ground Handling Conference (IGHC), Cairo, Egypt.

19-21 May (Tuesday-Thursday): Terminal Operations Conference & Exhibition, Hamburg, Germany.

JUNE

2-4 June (Tuesday-Thursday): ProPak Mena, Cairo, Egypt.

4-5 June (Thursday-Friday): Supply Chain and Logistics Summit, Amsterdam, Netherlands.

6-8 June (Saturday-Monday): IATA World Air Transport Summit, Rio de Janeiro, Brazil.

10-11 June (Wednesday-Thursday): Black Sea Ports and Logistics, Istanbul, Turkey.

22-23 June (Monday-Tuesday): Decarbonizing Shipping Forum, Rotterdam, Netherlands.

AUGUST

30-1 August (Sunday-Tuesday): Air Cargo Middle East, Riyadh, Saudi Arabia.

30-1 August (Sunday-Tuesday): Saudi Warehouse and Logistics Expo, Riyadh, Saudi Arabia.

SEPTEMBER

16-17 September (Wednesday-Thursday): Saudi Maritime & Logistics Congress, Dammam, Saudi Arabia.

28-30 September (Monday-Wednesday): Transport Logistics Middle East, Riyadh, Saudi Arabia.

OCTOBER

21-22 October (Wednesday-Thursday): Global Ports Forum, Singapore.

26-29 (Monday-Thursday): Air Cargo Forum, Miami, US.

27-29 October (Tuesday-Thursday): Routes World, Riyadh, Saudi Arabia.

NOVEMBER

2-5 November (Monday-Thursday): ADIPEC Maritime and Logistics Exhibition and Conference, Abu Dhabi, UAE.

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