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Could Israel-Hamas war lead to another winter energy crisis for Europe?

LNG spot prices have shot up since the Israel-Hamas conflict broke out, but European inventories are at all-time highs.
The Tamar drilling natural gas production platform, some 25 kilometers west of Ashkelon, Israel, February 2013.

The day after Hamas launched its surprise attack against Israel on Oct. 7, where scores of Israelis were killed and abducted by the Islamic militants in the south of the country, the Israeli government ordered the Tamar gas field shut down.

The field is Israel’s second largest, holding some 10 trillion cubic feet of natural gas, and is owned by Chevron, Dor Gas Exploration Limited Partnership, Everest Infrastructures, Isramco Negev 2, UAE-based Mubadala Investment and the Israeli company Tamar Petroleum. Before the shutdown, the field typically met around 70% of Israel’s power generation needs. 

Israel has so far managed to backfill gas supplies from its other fields to meet domestic demand and supply international customers, but the escalated conflict and the closure of Tamar have caused jitters in the energy market, with heightened fears of a wider war involving other Middle Eastern states.

Liquified natural gas (LNG) spot prices rallied by more than 40% on Wednesday, to $18.345 per one million British thermal units (MMBtu), an eight-month high. Multiple reports suggest that some LNG buyers in North Asia have paused plans to acquire additional winter fuel as a result of Hamas’ attack and Israel’s retaliatory bombardment of Gaza. 

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