The fire of Iran and Israel dispute smoldering in the Middle East has now come close to scorching the economies of the world. According to Reuters report, at least 150 oil tankers carrying crude oil and related products are currently standing in the open sea areas of the Gulf and are avoiding passing through the Strait of Hormuz. In fact, closing the Strait of Hormuz by Iran or disrupting the movement of commercial ships there could severely disrupt the global gas supply chain. About 20 percent of the world’s LNG (Liquefied Natural Gas) passes through this sea route. Bloomberg’s report is also pointing towards the same danger that even the slightest movement in this gulf can push the world into a major energy crisis.
Why is Asia’s concern increasing?
At the center of this entire crisis is Qatar, which is Iran’s neighbor as well as the world’s second largest gas exporter. Qatar’s geographical position is such that almost its entire gas export reaches different corners of the world through the Strait of Hormuz. If seen from India’s perspective, the situation is very sensitive. India buys 40 percent of its total gas requirement from Qatar alone.
Last year, Qatar exported a total of 82.2 million tonnes of gas. Of this, 20 percent was purchased directly by Asian countries. In terms of figures, China was the largest buyer with 20 million tonnes, while India was in second place with 12 million tonnes. Taiwan (8 million tonnes), Pakistan and South Korea (7 million tonnes each) are also heavily dependent on Qatar’s gas.
Scary picture like Russia-Ukraine war
Energy market experts see the current situation as a picture of four years ago, when the international gas trade became a victim of huge turmoil after Russia’s attack on Ukraine. Russia is the world’s largest gas supplier and at that time Europe had to face huge inflation due to the gas crisis. This time the center of the crisis is not Europe but Asia. Sensing this future problem, countries like China have already started looking for new alternatives to gas. However, experts clearly believe that finding a solid alternative to Qatar’s gas, especially for Asian countries, is not possible at present.
ships filled with fuel stalled in the sea
The effect of panic is already visible in the market. According to ship tracking data, at least 11 LNG tankers carrying gas have currently stopped their journey midway. Along with Qatar, the United Arab Emirates (UAE) also exports its gas through this sea route. Although Qatar’s government company ‘Qatar Energy’ has not officially stopped any shipment yet, the atmosphere of uncertainty continues to deepen. Since international contracts for LNG are usually linked to crude oil (the crude benchmark), a surge in Brent crude prices can directly set gas prices on fire.
Trouble for Türkiye too
The impact of this geopolitical tension is not limited to sea routes only. Countries like Türkiye are also under immense pressure. Türkiye imports about 15 percent of its total gas supply directly from Iran through pipeline. If this conflict prolongs, Türkiye’s energy crisis will also deepen. If such problems in shipping continue, then there will be a huge rise in gas prices in India, Japan and other Asian countries, which will directly hit the pockets of the general public.
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