Iran War Disrupting Energy Flows

Wholesale natural gas prices have doubled since the U.S. and Israel began bombing Iran, and nations are going into emergency mode to try to sustain the global energy circulatory system.

• Qatar produces 20 percent of the world’s liquefied natural gas. It shut down all production on Monday. QatarEnergy declared force majeure and canceled contracts due to unforeseen events.
• So have Asian petrochemical companies, such as South Korea’s Yeochun, Indonesia’s Chandra Asri, Singapore’s Aster Chemicals and the Petrochemical Corporation of Singapore.

Europe turns to Russia: The European Union is scrambling to deal with the shortages. It had planned to stop buying Russian gas by the end of 2027 in order to stop funding President Vladimir Putin’s war against Ukraine. Now, it may cancel those plans.

Putin celebrated the sudden turn of events by suggesting that maybe Russia should instead cut Europe off.

In addition to crucial energy shipments, other important exports are being affected.

“Ten percent of the world’s container shipping is caught in the Strait of Hormuz closure.”
—Jeremy Nixon, ceo of Ocean Network Express

• The Gulf states produce 15 percent of global aluminum exports. They can’t ship through the Strait of Hormuz, and Qatar has had to halt all production.
• Norsk Hydro, which partners with Qatar’s Qatalum, has also declared force majeure and warned that it could take six to 12 months before its plant is operational again.

The blockage of energy flows and other important resources, not to mention the many knock-on effects, reminds the world that national economies depend on sea gates like the Strait of Hormuz remaining open.

This provides even more incentive for powers like Europe to further rearm and assert power in the Middle East and elsewhere. It is also encouraging Europe to bring Putin back in from the cold so they’re less reliant on a single source for so many crucial raw materials.

• Watch for Europe to simultaneously deepen ties with the Middle East so they can keep those resources flowing and develop alternative sources in Russia and North Africa.

The Trumpet wrote in 2018, “If Iran fulfills its threat to shut down the Strait of Hormuz, it could lead to the prophesied clash between the king of the south [Iran] and the king of the north [German-led Europe].”

Europe is being forced to think much more strategically about the Middle East, Russia and its future as a rising world power.