Rabobank’s Senior Global Strategist Michael Every highlights that Brent and TTF prices have jumped as Israel, with US coordination, struck Iran’s largest gas field and Iran retaliated against GCC energy assets. The report notes damage at Qatar’s Ras Laffan LNG hub and possible hits on Saudi infrastructure, warning of structural supply risks and a potential ‘escalate to immolate’ scenario for global Oil markets.

War-driven supply threats lift prices

"Markets reacted --Brent around $112, 1-month TTF €54 at time of writing-- to Israel, in coordination with the US, striking Iran’s largest gas field, to which Tehran threatened retaliation against GCC oil and gas fields – and it has done so."

"Qatar has reported extensive damage at the world’s largest LNG export plant at Ras Laffan, which provides around 20% of global supply. Moreover, there are claims the Saudi back-up Yanbu oil pipeline that leads to the Red Sea (where the Houthis are still ominously quiet) may have been hit. That remains unconfirmed, but it would be dramatic in its impact if it were proven to be true, with millions of extra barrels of oil a day taken off the market."

"The fear now is not just lower supply flows but, alongside damage done to oil wells by shut-ins, of supply destruction. The fat tail risk is we might see a downwards spiral into ‘escalate to immolate.’"

"That was followed this morning by further suggestion --via an Economist article, it appears-- that the US might consider a crude oil export tariff or an export ban to curb energy prices. This would do little to help with expensive diesel, etc., but it would certainly throw ‘one price’ global energy markets into a further tailspin, widen the gap between Brent and WTI, already the largest in 11 years, and risk disrupting Asia and Europe to try to cushion the US. If it had the refineries to make it work, one wouldn’t rule it out – which speaks to where we may all head."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)