US-Israeli War on Iran Causes Major Oil, Gas Disruptions

The 'U.S. and Israel war against Iran' has caused oil and gas exports to the Middle East to be disrupted and production stops from Qatar and Iraq.

Here are some of the major energy disruptions that have occurred.

Production Shutdowns

Iraq, OPEC’s second largest?producer has reduced its output. Iraq has cut almost?1.5 mln barrels per day – about half of it – due to storage limitations and the absence of an export route. The country could be forced to close 3 million barrels per day, or nearly all its production, if exports don't resume.

QatarEnergy has halted its LNG operations. Qatar ceased operations at some of its largest LNG plants on Monday. This affected a source which supplies around 20% of global LNG. QatarEnergy suspended some downstream production on Tuesday. On March 4, it declared force majeure for LNG shipments.

Saudi disruptions. Saudi Arabia has suspended production at its 550,000 barrels per day Ras Tanura refinery. It also began rerouting crude loads from eastern ports towards Yanbu, on the Red Sea. Saudi Defence Ministry said that the refinery was hit again on March 4 - without any damage.

Israel and Iraq's Kurdistan Region also cut back on some of their oil and gas production.

A fire was also caused by debris in the UAE's Fujairah Port, which is a major global hub for oil storage and bunkering.

Shipping

Strait of Hormuz : Traffic through the Strait has been largely closed after Iran attacked five ships. Only a small number of tankers are allowed to transit, cutting off an important artery that accounts for around 20% of global LNG and oil supply.

Iran declares Strait closed. A senior Iranian Revolutionary Guards officer said on the?March 2, that the Strait of Hormuz is closed, and warned Iran that it would fire at any ship that attempted to pass.

War-risk insurance is cancelled by major marine insurers.

US provides assurances. Trump stated that the U.S. Navy can 'escort oil tankers through the Strait? and directed the U.S. International Development Finance Corporation (IDFC) to provide financial and political risk insurance for Gulf shipping. However, shipowners and analysts are skeptical this will be enough.

Impact on Consumers

China reduces refinery runs. Due to disruptions in crude flow, Chinese refiners have shut down crude units or are advancing scheduled?maintenance.

India looks for alternatives: India has been looking at alternative sources of crude oil, LPG, and LNG in order to be prepared if the crisis lasts longer than 10-15 days.

Indonesia shifts its sourcing: Indonesia intends to increase U.S. Crude imports in order to offset the reduced Middle East supply.

Traders said that alternative supplies are available. Cargoes can be shipped from Brazil, West Africa, and the U.S. but it takes over a whole month to get them to Asia. They are also more expensive due to the soaring freight costs. (Reporting and editing by Alex Lawler in London, Matthew Lewis, Gareth Jones; Reporting by Ahmad Ghaddar from London)

(source: Reuters)