- The Middle East is experiencing global instability due to the ongoing conflict between the US and Iran.
- Conflict in the Middle East is causing elevated uncertainty, monitored by bodies such as the Federal Open Market Committee.
- The conflict in the Middle East, involving Iran, is driving up energy prices and stoking inflation, which the Fed is monitoring.
- The Middle East war has led to commodity price increases and exposed gas supply vulnerabilities, impacting Western Europe's energy transition.
Middle East Conflict Drives Up Gas Prices, Boosting Coal Viability in Europe
What happened
Due to Middle East conflicts and disruptions to liquefied natural gas shipping through the Strait of Hormuz, European benchmark gas prices briefly reached three-year highs, exceeding 80 euros per megawatt hour this month. This surge in natural gas prices has caused the economics of power generation to reverse in Europe, making coal more profitable than natural gas in major European power markets, even after factoring in higher carbon emissions costs. Analysts project that European coal-fired power generation could increase by roughly a quarter over the next six months, while gas-fired output is expected to decline.
From cnbc.com
Why it matters
The conflict in the Middle East has led to commodity price increases and exposed gas supply vulnerabilities, impacting Western Europe's energy transition. The shift in profitability is reversing decades of energy transition policies, as high gas prices drive up energy costs and stoke inflation.
The Middle East war has led to commodity price increases and exposed gas supply vulnerabilities, impacting Western Europe's energy transition.
From cnbc.com
Who's involved
- EuropeThe continent experiencing the reversal of energy generation economics and rising gas prices.
- Middle EastThe geopolitical region whose conflict is driving up energy prices and creating shipping disruptions.
- HormuzThe shipping chokepoint whose disruptions are contributing to the surge in European gas prices.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- EuropeSpeculative
Europe might face increased energy costs and a potential slowdown in the energy transition due to the increased profitability of coal generation.
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The entities involved
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Europe
terrestrial continent located in north-western Eurasia
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Middle East
geopolitical region encompassing Egypt and most of Western Asia, including Iran
Related events
- Conflict disrupts global energy supply chains and affects fuel costs, impacting regions like California and Texas.
- Conflicts in Eastern Europe and the Middle East are disrupting energy markets and driving up prices.
- High gas prices force production pause in Europe amid Hormuz Strait disruption, while Ineos seeks tariff protection against Chinese products.
- Oil refinery attacks disrupt global supply, driving price escalation and affecting energy market regulation.
- Conflict in the Middle East is driving policy shifts and mandates within energy blocs in response to global market pressures.