The economic impact of the conflict will mainly depend on its duration, according to the governor of the Bank of France, even though for now, the shock is stronger on gas than on oil, notably because Qatar, a major exporter of liquefied natural gas, has halted its production. 90% of oil tankers and gas carriers are still blocked on both sides of the Strait of Hormuz.
The conflict with Iran strengthens Russia’s position, with whom Europe aims to definitively cut off energy ties by 2027. With the closure of the Strait of Hormuz, India, the country most exposed in the short term to the shortage, risks immediately turning to Russian oil, given its proximity. If the conflict extends beyond a few weeks, China could follow the same path.
This is a boon for Moscow, which in recent months was forced to sell its hydrocarbons at rock-bottom prices due to European sanctions related to the war in Ukraine. A sign of renewed interest in Russian oil: prices are on the rise.
The United States, on the other hand, can benefit from LNG. To make up for the loss of Qatari liquefied natural gas, which accounts for 8% of their imports, Europeans have little choice but to turn more towards the United States. The problem is that American shale gas export infrastructure has been operating at full capacity since the war in Ukraine. American exporters will struggle to significantly fill the gap.
The question is the duration of the blockade in the strait, according to LNG importers. A prolonged blockade risks reigniting competition for available shipments and fueling price wars between Europe and Asia.
