ENERGY AND HONOURS TO THE VICTIMS OF THE NEW WAR - WHAT HAS CHANGED IN THE LAST FEW DAYS - EAC RECEIVES FUEL OIL TODAY - Filenews 3/3 by Charalambos Zakos
Millions of people, thousands of flights, ships, military, energy and other strategic infrastructure are at risk following the widespread conflict in the Middle East. And while the fears in the past were about the price of oil, today another problem is emerging concerning the supply chain.
Strikes on oil facilities have created problems, while other companies have taken precautionary safety measures that may reduce production. At the same time, thousands of ships carrying fuel oil, diesel and LNG are on hold, due to the events in the Strait of Hormuz.
We have stocks for month
Cyprus, in addition to the attack on the British Akrotiri Bases in the early hours of the morning and at noon on Monday, is also called upon to deal with issues that may arise in energy, from a reduction in the production and supply of fuel oil.
However, as "F" is informed, the Electricity Authority of Cyprus is not going to face any problems, even if the supply of fuel oil and diesel is temporarily interrupted, since it maintains reserves that can meet the needs of Cyprus for a few months. On the positive side, too, is the fact that, according to the same information, today there will be a new delivery of fuel oil from an EAC supplier.
It should also be noted that the supply to the EAC is also made from the European area and so there seem to be solutions, even if an even more serious problem arises in the supply chain of the Middle East.
The Commission asks for information
Indicative of this concern is the e-mail sent yesterday to all governments of the member states by the Commission, asking for information on whether they are facing problems in their fuel supply.
Specifically, as reported by the Athens News Agency, although the Commission does not consider that there are direct consequences for the supply of oil to the European Union, it nevertheless requested information from each member state.
As stated in the relevant correspondence, "at this stage, we do not foresee a direct impact on the security of oil supply", however, in the same message it asks European governments to communicate their own assessments regarding the security of their supplies today.
The EU meets on fuel
At the same time, according to the latest information, the European Union's Gas Coordination Group is expected to meet on Wednesday, with the aim of assessing the impact on Europe's security of supply from the latest developments.
As a spokesman for the European Commission told Reuters, the coordination group includes representatives from the governments of the member states. The Commission, as noted, wants to closely monitor the reserves of natural gas, oil and security of supply on European soil, in order to coordinate and take the necessary measures to deal with potential problems.
Kuwait, Qatar and Saudi Arabia
Iran has so far hit Ras Tanura, one of Saudi Arabia's largest refineries, with drones, and Kuwait and Qatar are expecting possible attacks on their own oil facilities. In fact, according to the latest information, drones targeted facilities in Ras Lafan in Qatar. Which resulted in the production of liquefied natural gas being stopped.
In fact, after this latest decision, the European market is in a strong shock, with prices skyrocketing up to +45% in Europe. And this is no coincidence, as Qatar is the second largest supplier of LNG in the world, after the United States.
It should be noted that in Europe, Dutch benchmark contracts were trading at 14:32 (Cyprus time) at +45.20%, at €46.405/MWh, reflecting the fear of disruptions of shipments from the Middle East.
The worst-case scenarios
According to international media, Kuwait's Al Zour and Qatar's Ras Lafan also have large liquefied natural gas (LNG) facilities, which are concerned about the possibility of being the target of Iranian attacks, with the latter already under attack.
Ras Lafan is a sprawling industrial complex, about 80 kilometers northeast of Doha, and is considered the world's most important LNG transshipment hub.
At the same time, the state oil company of the United Arab Emirates, Adnoc, manages another large energy complex in Rouvais.
However, if all these areas are targeted, then it will be one of the worst scenarios for the energy security of all states, combined with the escalation in the Strait of Hormuz.
US President Donald Trump has left open the possibility that the joint US-Israel military operation could be extended for weeks, a development that could lead to a long disruption of navigation through the Strait of Hormuz.
It is not just a sea route, but a strategic sea passage through which about 20% of the world's oil production and a corresponding percentage of liquefied natural gas are traded, mainly by Middle Eastern producers. This maritime zone is about 50 kilometers long and is located between Iran and the Musadam Peninsula, which belongs to Oman.
Attacks on tankers
Sunday's attacks damaged three tankers and resulted in the death of one sailor, while the first acts of war forced about 200 ships to anchor in the wider area of the Strait in order to limit the danger.
On Monday, insurance companies cancelled war risk coverage for ships operating in the region, while market sources estimate that tanker fares will move upwards as shippers avoid transit.
As Citi analysts note in a note, Iran has not officially closed the Strait of Hormuz, but the increased risk aversion on the part of shippers is already evident. Transit flows have decreased, with a significant number of ships remaining outside the Strait. Meanwhile, international oil prices rose about 9% on Monday, after earlier rising by up to 13%.
In "safe waters" maritime
At the same time, Chinese shipping company Cosco has ordered its ships in the area to sail in "safe waters", essentially putting them on hold to ensure they are not targeted.
The Chinese giant is one of the latest examples of large companies suspending their maritime operations after the paralysis of maritime transport in the Strait of Hormuz. It was preceded by Maersk and MSC, which had also announced a suspension of their operations in the region from the first days of the conflict.
