Renewed Hormuz tensions raise chances of a pricey winter

{"text":[[{"start":4.6,"text":"As the US and Iran continue to trade blows, the oil market has finally woken up to the risk that energy flows might not resume as hoped. European gas prices, meanwhile, are at their highest level since March having risen by almost 30 per cent in the last month. Every day that the strait remains part-closed raises the chance that Europe will face giant heating bills this winter. "}],[{"start":29.950000000000003,"text":"To understand why, take a step back and look at how the market survived the loss of 20 per cent of global liquefied natural gas during the war in Iran, emerging relatively unscathed. The answer is that over half of the shortfall, on Wood Mackenzie numbers, was offset by new projects that had recently started up, mainly in the US."}],[{"start":52.400000000000006,"text":"For the rest of it, Asian demand for LNG fell as coal stations increased output, and European countries took advantage of spring to delay filling huge underground storage facilities, on which they rely for winter heating. These are currently just above half full, compared to a more usual 60 per cent at this time of year. "}],[{"start":null,"text":"

"}],[{"start":71.55000000000001,"text":"Roughly speaking, the amount of gas that is coming to market from new projects is sizeable enough that, should the disruption in the strait last for half the year, gas supply for the whole of 2026 will end up being in the same ballpark as the prior year, Lex calculates. The International Energy Agency has estimated that, should flows resume over the next few months, by the end of the year the impact of the preceding months would have been roughly ironed out."}],[{"start":99.00000000000001,"text":"There’s no guarantee supply will pick back up in a linear way. Traffic has again slowed sharply, eroding the buffer. And demand is a moving target: statistically, a cold winter can add some 20bn cubic metres to European consumption, with low rainfall and wind speeds also swelling gas requirements. "}],[{"start":118.65,"text":"Should the market end up short, the result would be that vast swaths of Asia and Europe — which tend to be cold at the same time — would compete for LNG cargoes, driving prices higher. And because natural gas sets the price of electricity for a good many hours of the day, that would also raise power bills. That would be painful for European households and companies, and give their US rivals — which benefit from lower-priced domestic gas — yet another opportunity to pull ahead. "}],[{"start":153.55,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1784183300_1015.mp3"}