Sharp changes

The disruption to the energy market caused by the war in Iran and the effective closure of the Strait of Hormuz seems to be redefining it in terms of losers and winners, especially as the decline in global reserves puts pressure on economies.

As for the Straits, the (non)movement of tankers and LPG/LNG carriers in them determines the rather unprecedented seesaw in crude oil prices. This seesaw, that is, the sharp changes in the price of oil, is largely attributed to the expiration of futures contracts.

These are agreements to buy or sell an asset on a specified date – and in this case, the current Brent futures contract for delivery in June expired last Thursday.

This, analysts explain, also contributed to the fall in its price, until rumors of new military action that Trump is reportedly considering on Iran sparked a new rally. Earlier, the most active contract for July was trading lower, at around $110 a barrel.

And why is this important? Crude oil is the main ingredient from which gasoline and diesel for driving and heating are derived, with the increase in costs since the start of the war in Iran leading to an increase in prices at gas stations, making the transportation of products more expensive and triggering inflationary hell in the market.

The big losers of all this disruption include, first and foremost, Arab oil producers. Saudi Arabia has seen its dominance in OPEC – to which Iran belongs, while Russia also cooperates through OPEC+ – openly challenged after the withdrawal of the UAE (which resents the lack of protection from the Arab world during the Iranian attack), and a large part of its clientele has also moved.

We saw a typical example in our country last week, when Motor Oil, a traditional partner of the oil companies of the Arabian Peninsula, ordered and received American crude. The need to keep the economy moving and not to disturb its calm with a reduction in reserves is important.

Moscow is well aware of this, as it sees a number of economies in Asia and Africa, such as Singapore and Egypt, which are directly dependent on Arab oil, entering an energy crisis that is even leading to lockdowns.

For this reason, it is abolishing the significant discount (up to $12 below the benchmark) that it has used until now as a lure for the Chinese and Indian markets, while at the same time attempting to put energy pressure on Europe.

One such move is its revised export program, under which Kazakhstan’s oil exports to Germany via Russia’s Druzhba pipeline are being interrupted. Last year, these totaled 2.146 million tonnes, about 43,000 barrels per day, up 44% from 2024.

Widespread damage

Adding pressure on Europe is the Iranian strike on Qatar: missiles hit the Ras Laffan complex, causing widespread damage to the world’s largest liquefied natural gas plant. The facilities that were hit produce 17% of the country’s LNG exports, about 13 million tonnes a year. It is expected to take three to five years to fully repair the damage.

With natural gas prices soaring to three-year highs, the ECB said a prolonged production outage from Ras Laffan would push eurozone inflation to 6.3% and trigger a short-term recession. Already, price increases have added €7 billion to Europe’s energy bills in just two weeks, according to the European Commission.

Qatar, which is facing one of the most critical economic periods in recent years, after the attacks on energy facilities in the industrial cities of Ras Laffan and Mesaieed, is seeking synergies with the UAE and Oman, countries with which it did not even have diplomatic relations until a few years ago, but now have in common their withdrawal from OPEC. Its ability to withstand the blow is an existential question.

Not only because QatarEnergy decided to suspend the production and exports of liquefied natural gas, with an impact on related industries, such as aluminum, petrochemicals, helium and fertilizers, but also because the crisis simultaneously raises broader questions about the reliability of supply, the trust of partners and the limits of resilience in an increasingly volatile global energy market.

With exports halted for almost two months, the impact is widening to include immediate revenue losses, reduced shipments, supply chain disruptions and uncertainty over long-term contracts with major importers in Asia and Europe.

The key impact for QatarEnergy, as it is a force majeure event that exempts it from the legal consequences of delays, is the reputational cost. Major buyers take into account not only contractual terms, but also a supplier’s ability to deliver consistently during times of stress.

Any prolonged disruption therefore paves the way for competitors such as the United States, Australia, Algeria and Russia to strengthen their positions in sensitive markets.

Canal of Despair

With the Strait of Hormuz de facto closed, Gulf countries, facing the risk that their customers will permanently switch to other suppliers, are looking for alternatives to restore the flow of oil and gas to them.

Qatar, for example, relies heavily on the Dolphin natural gas pipeline, which has been transporting LNG – since 2006, when it was completed – from Qatar’s North Field to Tawila in the UAE and from there to Oman. With a capacity of 3.2 billion cubic feet per day, it is the only natural gas interconnection between the three countries, operating uninterrupted even during the diplomatic blockade.

The Emirates currently support the bypass of the Straits by channeling 40% of Abu Dhabi’s hydrocarbon exports through the ADCOP (Abu Dhabi Crude Oil Pipeline). The 380 km long ADCOP transports crude oil from Abu Dhabi’s Habshan to the Fujairah terminal on the Gulf of Oman, with a capacity of 1.5-1.8 million barrels per day.

But is this enough? The approximately 2.6 million barrels per day of capacity of the alternative pipelines of Saudi Arabia and the UAE is a drop in the ocean, less than 13% of the total flow, compared to the approximately 20 million barrels per day that oil flowed through the Straits in 2025.

An expansion of the ADCOP with a second pipeline to Fujairah is already planned, as well as upgrades to the port of Duqm in Oman, so that the UAE, Qatar and Oman can channel a significant part of their exports directly to the Indian Ocean, bypassing the Straits.

For its part, Saudi Arabia has approached the UAE, Qatar and Oman to jointly build a road corridor to Haifa or a canal to the Arabian Sea. The canal could be more than 950 km long and completely bypass the Straits, with a cost that would be gigantic and the time required approaching a decade, but it is a project that would make the Arab countries’ independence from Hormuz permanent.

A big question, however, is whether and to what extent such an investment is worth it in the long run, as the energy market is transforming and increasingly turning to clean energy production solutions.

The rise of America

On the high seas, a flotilla of empty, huge tankers is turning westward, heading for the USA. There, mining companies and refiners are rubbing their hands, as they are the big winners from the war in Iran and the strangulation caused in the energy market.

Intended to meet the needs of a market facing the biggest supply crunch in history, about 2 million barrels of US crude will be loaded onto 30 tankers that will transport them to global markets.

The number of tankers heading for the US for loading these days is six times higher than last month, while US exports through terminals have already increased by 30%, now reaching 5.2 million barrels per day.

Essentially, 50% of the blocked daily flow of 10 million barrels of Gulf oil through the Strait is covered by US crude exports. Similarly, jet fuel exports from the US have doubled, reaching record highs, as European airlines begin to cut flights as the Old Continent attempts to stabilize its supplies.

But that’s not all. As the market now sees the traditional dominance of the Gulf oil-producing countries in the energy market being challenged, it is watching America’s rise.

Not just the US, but the entire continent in general, as analysts expect the increase in US and Canadian crude production to continue and within a decade Latin American production will cover more than half of the world’s oil supply.

Brazil and Argentina are expected to add about 2.5 million barrels per day to their production over the decade, while if crude prices remain above $100, the production of an additional 2.1 million barrels per day from South America will become highly profitable.

High prices are expected to favor other oil-producing countries (one question is how Venezuela will move in the post-Maduro era, with its outdated equipment) or to bring new deposits, such as those in Greek territory, into play. This is because high fuel prices favor large investments by oil companies in oil field research and development and make extraction more profitable based on the profit from the final sale price.

Restructuring

At the same time, the dominance of the Americans on the energy chessboard signals a possible rearrangement of global energy supplies and constitutes the greatest threat to the future energy dominance of the Middle East.

The one threatened mainly is Saudi Arabia, which, relying on its endless oil reserves, had become the largest supplier of crude oil in the world and the de facto leader of the OPEC cartel and its allies. In a few weeks, the war in Iran has eliminated 1/3 of its crude oil production and shaken the kingdom’s hegemony in OPEC.

Restarting the region’s shuttered oil and gas fields and infrastructure damaged by drones is expected to cost between $34 billion and $58 billion, according to analysts at consultancy Rystad Energy. The process of restoring production to previous levels could take years, if at all.

The final battle

It should come as no surprise, but in the energy market reshuffle, in which the US oil industry is currently emerging as the big winner, the final battle looks set to be between the world’s two largest economies.

That’s because China may be completely dependent on oil for its industrial production, but it has opted for a completely different strategy: for decades it has invested in and gained dominance in the supply chains of key components of clean energy technologies, from wind turbines to solar panels and batteries.

Doubling in exports

Beijing’s industrial dominance has helped the world’s largest energy importer also become the world’s largest supplier of clean energy technologies, capturing a share of between 60% and 85% of the global renewable energy market.

Capitalizing on the international transition from fossil fuels to clean energy, Beijing, analysts explain, is exploiting the energy crisis with its uncertainty regarding fossil fuel reserves and supply, as well as extreme fluctuations in their prices.

Thus, from the very first days of the war in Iran and during the first month of the closure of the Strait of Hormuz, China doubled its exports of solar energy technology materials, reaching historical highs. The 68 GW exports were 12 times greater than the total solar capacity of Greece in 2025 (5.7 GW).

The continuation of the fossil fuel crisis favors China, which has invested in solar energy. Last year alone, solar energy covered more than 1/4 of the increase in demand at the global level.

Solar power generation jumped by 600 terawatt-hours in 2025, the largest annual increase ever for any form of power generation outside of a recession.

This boost accounted for about 70% of the global increase in electricity generation, with total solar power generation reaching nearly 2,700 terawatt-hours, more than double the level in 2022.

Photos: Getty images / Ideal image, REUTERS, Shutterstock

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