New Delhi: Israel’s airstrikes on Iranian nuclear sites have pushed Brent crude oil prices to a two-month high of $75.19 per barrel and disrupted regional natural gas exports, raising concerns over energy market volatility and potential supply disruption.
According to S&P Global Commodity Insights, Dated Brent rose sharply on June 13, recording the biggest single-day gain in nearly five years. Middle East sour crudes also saw significant movement, with Platts assessing front-month cash Dubai at $72.50/b, a 5.7 per cent increase from the previous day.
Richard Joswick, head of near-term oil analysis at S&P Global Commodity Insights, said, “The attack is obviously bullish near term for oil prices, but the key is whether oil exports will be affected. When Iran and Israel exchanged attacks last time, prices spiked, then fell once it was clear the situation wasn’t escalating and oil supply was unaffected.”
Iran produced 3.25 million barrels per day (b/d) of crude in May, according to the Platts OPEC Survey. It also holds around 2.2 million b/d of refining capacity and 600,000 b/d of condensate splitting capacity. However, its exports dipped below 1.5 million b/d in May amid rising tensions and an increase in floating storage levels.
“If Iranian crude exports are disrupted, Chinese refiners, the sole buyers of Iranian barrels, would need to seek alternative grades from other Middle Eastern countries and Russian crudes,” Joswick said. “This could also boost freight rates and tanker insurance premiums, narrow the Brent-Dubai spread, and hurt refinery margins, particularly in Asia.”
Gas production suspensions affect regional supplies
Israel’s Ministry of Energy confirmed temporary shutdowns at the Leviathan and Karish gas platforms. These facilities account for around 1.8 billion cubic feet per day (Bcf/d) of production and supply 1.2 Bcf/d of pipeline gas exports to Egypt and Jordan, all of which have been suspended.
Laurent Ruseckas, Executive Director at S&P Global Commodity Insights, said, “The shutdowns are bullish for LNG prices, initially on sentiment, and possibly more if they persist. Egypt and Jordan will need to replace Israeli imports, and that could quickly build demand for LNG cargoes.”
Egypt’s floating storage and regasification unit (FSRU), Hoegh Galleon at Ain Sokhna, is already operating at full capacity. Two other FSRUs—Energos Eskimo and Energos Power—are offline for maintenance. Ruseckas stated that if the additional units are not brought online swiftly, Egypt and Jordan may have to use fuel oil or enforce gas rationing.
“To fully replace Israeli pipeline imports, Egypt and Jordan would require another 10–12 LNG cargoes per month,” he added.
Geopolitical concerns and shipping disruption risks
Analysts from S&P Global Commodity Insights noted that the Strait of Hormuz, through which nearly 20 per cent of global LNG trade passes, remains a critical vulnerability. Any potential retaliation from Iran involving maritime routes could impact global energy flows.
“There is a risk to LNG supply if Iran retaliates by threatening shipping through the Strait of Hormuz,” the analysts stated.
Platts tanker tracking data shows Red Sea commercial transits have already declined by 60 per cent since late 2023 due to Houthi-related disruptions. Although freight rates for Red Sea routes have remained stable, an escalation could reverse the trend.
Joswick said, “The longer-term impact on oil and gas markets will depend on whether the conflict escalates into a regional war or remains contained. Price risk premiums tend to fade unless actual supply is disrupted.”
Markets continue to monitor developments closely as tensions in the Middle East affect energy trade flows and pricing dynamics.
