Study on the Impact of Escalating Middle East Conflicts on the Global Energy Market

Key Chapter Title List

1. Supply Risks Rise Again
2. Why the Market Has Not Panicked
3. Market Undercurrents and Oil Price Trends Amid the Middle East Conflict
4. Escalating Middle East Situation Reverses Oil Price Downtrend
5. Two Key Factors to Watch in the Liquefied Natural Gas Market
6. Impact of Red Sea Navigation Freedom Disruption on U.S. LNG Trade

Document Introduction

In October 2024, the turbulent situation in the Middle East continued to escalate, posing a potential reshaping effect on the global energy market. However, oil prices have shown unexpected stability. The driving factors behind this contradictory phenomenon, the risk of energy supply disruptions that conflict expansion may trigger, and the ripple effects of regional competition on liquefied natural gas trade have become core concerns in the field of international energy security. The Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS) organized top experts to conduct an in-depth analysis of the above issues, resulting in this special research report.

The report first focuses on the evolution of supply risks in the oil market, analyzing the potential for oil price fluctuations under different conflict scenarios through data: extensive sanctions, attacks on facilities related to the Strait of Hormuz, or shipping lane blockades could lead to varying degrees of price increases. Simultaneously, Israeli strikes targeting Iranian nuclear facilities or refining capabilities, and the retaliatory measures they might provoke, posing threats to the security of oil and gas production and transportation facilities in the Gulf region, are also key analysis content.

To explain the market's relative calmness amidst escalating conflict, the report elaborates from three dimensions: the global oil market has ample supply and significant buffering capacity, with OPEC+ possessing over 5 million barrels per day of spare capacity; the application of advanced monitoring technologies has reduced market sensitivity to potential supply disruptions, weakening price volatility; the geopolitical climate in the Gulf region has changed, with Iran and Saudi Arabia's willingness for reconciliation and Arab countries' desire for de-escalation, reducing the likelihood of large-scale conflict spillover.

In the field of liquefied natural gas, the report identifies two core risk points: the Strait of Hormuz, as a critical passage for Qatar's LNG exports, where tensions could affect 20% of global LNG trade; security threats facing gas fields in the Eastern Mediterranean, which may lead to increased LNG demand in countries like Egypt, exacerbating winter supply balance pressures. Furthermore, Houthi attacks on Red Sea shipping have forced Western LNG tankers to alter routes, not only increasing transportation costs and time from the U.S. to Asia but also raising derivative issues such as methane emissions.

The report concludes by stating that the Middle East conflict will continue to exert pressure on energy prices in the coming months, with Israel's military actions being the core variable determining supply risks. Although current market fundamentals exhibit bearish characteristics, the possibility of conflict escalating into a comprehensive geopolitical crisis could still trigger supply disruptions from major Gulf oil producers, leading to a historic surge in oil prices. This report provides decision-makers such as defense researchers, energy policymakers, and geopolitical analysts with an evidence-based and professionally judged reference, aiding in understanding the complex interactive logic between conflict, geopolitics, and energy markets.