The 7th of October marked a new turning point in the ongoing geopolitical tensions affecting the world. With the crisis escalating in the Gaza Strip following Hamas’ targeting of Israel and Israel’s subsequent escalation, concerns of a prolonged and expanding crisis involving other parties have emerged. This has created widespread risks that threaten markets and deepen the extended economic uncertainty.
The gas sector finds itself at the heart of these tensions, particularly considering Israel’s regional significance in this sector, despite its production and exports not being massive by international standards.
The potential ramifications of this escalation, depending on the evolving conditions in Gaza, affect not only Israel but also several regional countries, including Egypt and Jordan. These consequences also extend, to varying degrees, to Europe, which benefits from gas imports from Egypt and serves as a regional hub for gas transit from Israel, where re-gasification operations take place.
Europe faced an energy crisis last year, impacted by the repercussions of the war in Ukraine, the halt in Russian supplies, and sanctions against Moscow, affecting European nations. The current tensions in the region are now raising similar concerns, especially in the face of possible scenarios related to the ongoing tensions, including the worst-case scenario involving the expansion of the conflict and the involvement of new parties.
Such developments could have severe repercussions on markets, including energy markets, potentially leading to renewed challenges for the continent that is still grappling with the fallout from the Ukraine war.
Multiple Risks at Play
In this context, a report published by Standard & Poor’s Global noted the following statements by the CEO of the German company Wintershall Dea:
• Europe still faces “multiple” potential risks concerning gas supplies this winter, with concerns about the ability to bear gas costs.
• “We are now in the cold winter season… Three months ago, we warned against complacency this winter… As we have seen in the past three months, there are still risks to the ability to bear costs and supply security.”
• The situation remains fragile, with “multiple” potential risks on supplies, including the current conflict in the Middle East.
On October 27, “Standard & Poor’s Commodity Insights” assessed the Dutch TTF benchmark gas price for the previous month at 50.44 euros per megawatt-hour.
