Gas and oil prices, and in their wake, diesel prices, have risen sharply following the US and Israeli attack on Iran and the country's counter-reactions. Iran has targeted oil and gas infrastructure: the Strait of Hormuz, through which roughly a fifth of the world's oil and gas trade passes. Drone attacks have also targeted Saudi Arabia's largest oil refinery and a gas plant and power station in Qatar. The country has halted LNG exports. The gas price has risen by almost half.
Oil prices briefly reached above $82 per barrel this morning (Monday, March 2nd) before falling back down. The difference between the high and low was almost $5. At the time of writing, the price is $79,12. This represents an increase of almost 9% compared to the closing price of last Friday, February 27th ($72,87 per barrel).
Qatar halts LNG exports
Gas prices rose sharply. The TTF futures market was trading at €31,96 per MWh before the weekend. At the time of writing, this is €46,26 per MWh, up almost 45%.
Roughly one-fifth of the world's liquefied natural gas trade (primarily from Qatar) passes through the Strait of Hormuz, according to the US Energy Agency. This primarily goes to Asia. Qatar announced today that it will temporarily halt LNG production after Iranian drone attacks on a gas production facility and power plant.
Meanwhile, the fill level of Dutch gas reserves is at a low point. Because gas was cheap and market participants didn't expect to make a profit, reserves are now only 10,6% full, according to data from Gas Infrastructure Europe.
Need for strategic storage?
A few weeks ago, the TNO research institute raised the question of whether the Netherlands isn't leaving security of supply too much to the market. "Now that Iran is closing the Strait of Hormuz, 2 billion cubic meters of gas per week or 110 billion cubic meters of gas per year could be blocked for an extended period," Rene Peters, director of gas technology at TNO, wrote on LinkedIn. "This will initially primarily affect Asia, where most LNG from the Middle East is destined. But indirectly, it will lead to market shifts and price increases that will also affect Europe. Just as the filling season for gas storage facilities is about to begin again. Perhaps it's time to reconsider the resilience of our gas supply and the need for strategic storage facilities?"