Huatai Futures: Iran Attacks Energy Facilities, Oil and Gas Markets Face Disruption

After the Strait of Hormuz experienced significant disruptions over the weekend, the Middle East situation escalated again on Monday. Iran began attacking energy infrastructure in neighboring countries, with the largest Saudi refinery and Qatar’s liquefied natural gas export facilities targeted by drone strikes. We believe that attacks on energy infrastructure will have an unprecedented impact on the oil and gas markets. This round of Middle East conflict will serve as a stress test for the energy vulnerabilities of various countries. Although large strategic reserves have been built up to hedge against the risk of Strait of Hormuz shutdown, a prolonged closure exceeding 10 days or attacks on oil fields in countries like Saudi Arabia could lead to an actual energy crisis. Compared to crude oil, the overseas refined oil and natural gas markets are more fragile. Due to sanctions on Russia, refinery capacity reductions, and Europe’s low natural gas inventories, there is no buffer similar to the crude oil SPR. Disruption of Qatar’s LNG exports would cause a substantial supply interruption, and reduced Middle Eastern refined oil exports would be difficult to compensate with other sources. Therefore, crude oil, refined oil, and natural gas prices still face significant upside risks, and the situation in the Middle East must be closely monitored. (Huatai Futures)