The US-Israel-Iran conflict impacts the global energy market. Who is the biggest winner in this crisis?

The Iran-Israel conflict has entered its 11th day, and despite Trump claiming the war is “basically over,” the reality remains far from calm.

The Strait of Hormuz, a critical global energy chokepoint, is facing severe challenges, with shipping giants suspending operations and maritime traffic dropping by 90%. The conflict has heavily damaged energy infrastructure in multiple countries, leading to halts in oil and liquefied natural gas (LNG) production.

Lu Riquan, Director of the China Petroleum Group Economic and Technical Research Institute, publicly stated that the current situation is more likely to evolve into a new form of confrontation between “limited conflict” and “long-term consumption.”

As the crisis shows signs of prolonging, global energy flows are changing. Who is harmed in this crisis? Who are the biggest winners?

Several industry insiders analyzed for JiJie News that Russia may become the biggest winner in this energy crisis.

“From an energy market perspective (not considering geopolitical interests), the U.S., Russia, and other non-Middle Eastern oil-producing countries are all winners. Of course, the biggest winner could be Russia,” said Xu Muyu, senior crude oil analyst at Kpler, a commodities data provider, in an interview with JiJie News.

Xu further explained that Russia’s crude oil prices are currently rising, combined with India obtaining U.S. permission to purchase openly, and some shipping companies and enterprises involved in Russian oil trade possibly being removed from sanctions lists. These factors will directly boost Russia’s energy revenues and benefit Russian energy companies.

According to media reports, Trump spoke with Russian President Putin on the 9th, discussing Iran’s war and other international issues. Trump is considering measures such as relaxing U.S. oil sanctions on Russia and releasing emergency crude oil reserves.

An industry analyst who wished to remain anonymous told JiJie News that amid supply disruptions in Qatar and soaring European gas prices, Europe faces significant energy pressure. In extreme cases, Europe may have to reconsider and increase pipeline gas imports from Russia to ensure livelihoods and industrial needs.

Besides Russia, the U.S. and other non-Middle Eastern oil-producing countries are also on the “winning” side.

Xu Muyu pointed out that the current rising oil prices allow the U.S. to export oil and gas at higher prices globally. Domestic producers can hedge at high levels to lock in cash flow and avoid future price declines, maintaining capital expenditure and supporting future production growth.

“Other oil regions like Norway, Guyana, Canada, and West Africa can take advantage of high prices to sell oil and increase refinery utilization, realizing current high profits,” she said.

In terms of natural gas, the U.S., as the world’s largest flexible LNG supplier, will become a “lifeline” sought after by European and Asian buyers.

The industry insider noted that the conflict will likely strengthen the U.S. position as the world’s largest energy supplier, maintaining high utilization of LNG export facilities and possibly accelerating investment decisions for new export projects. Although not directly benefiting from high prices, the U.S. is the biggest beneficiary in terms of geopolitical landscape and market share.

Additionally, multinational energy companies and traders with flexible long-term contracts are also direct beneficiaries of this market volatility.

“For example, companies holding long-term contracts linked to the Henry Hub price in the U.S. can exploit the widening price gap between the U.S. and Europe/Asia for resale arbitrage. The spread for U.S. gas to Europe has significantly widened after the conflict, bringing substantial performance flexibility to related companies,” the insider said.

Compared to the “winners” on the supply side, China, as a major consumer, faces some impact but overall risks are manageable.

Xu Muyu believes that although over 70% of China’s crude oil consumption relies on imports, with 50% of maritime imports coming from the Middle East, China has relatively large oil and gas inventories. “Existing stocks are enough to cover at least three months of total imports or half a year’s Middle Eastern oil demand.”

However, domestic refineries are showing a differentiated impact from this crisis.

Refineries heavily dependent on Middle Eastern crude oil supplies are directly affected and have been forced to cut production first. In contrast, refineries with a lower proportion of Middle Eastern oil and those with locked-in shipments from West Africa and Latin America for March and April are relatively more stable.

“This conflict has a significant impact on China’s independent refineries, which are the main importers of Iranian crude oil,” said Yan Jiantao, Chief Analyst at Jiecheng Energy.

However, Xu Muyu mentioned that some independent refineries can still maintain stable production. “Most domestic independent refineries mainly source Iranian and Russian oil. Currently, Russian oil supplies are unaffected by the conflict, and Iran’s offshore inventories are sufficient to cover the next three to four months of import needs.”

A related person from a state-owned refining enterprise told JiJie News that recent crude oil imports have been significantly affected. Currently, the crude oil processed in late April has not been finalized, and the company has reduced crude processing by 50 tons per hour. The company’s crude imports mainly come from the Middle East, with some from South America, procured through China United Oil.

This crisis may serve as an opportunity to reshape China’s refining industry landscape.

Yan Jiantao pointed out that the domestic refining industry already faces overcapacity and low operating rates. Coupled with a dependence on over 70% of crude oil imports, the export of refined products has continued to increase.

“This industry structure is unreasonable and unsustainable in the long term. The geopolitical shocks from this conflict provide an opportunity for the country to reconstruct and regulate the refining industry and the refined oil market, turning risks into opportunities,” he said.

In the natural gas sector, despite concerns over Qatar’s supply interruption, short-term risks for China are manageable.

Liang Yinghan, Senior Natural Gas Analyst at Zhuochuang Information, told JiJie News that under the impact of the U.S.-Iran conflict, China’s LNG imports will decrease, but the overall supply impact is limited.

Liang explained that Qatar is a major LNG source for China, accounting for about 30% of China’s LNG imports by 2025. If the Strait of Hormuz remains closed until late March or early April, and Qatar’s supply facilities suspend production for maintenance, China’s LNG arrivals in March and April could decrease by over 1 million tons.

In the short term, this reduction can be buffered by LNG inventories.

Kpler natural gas analyst Xiong Neng said that as of the end of February, China’s liquefied natural gas inventory level was estimated at about 53%. Even if imports from Qatar and the UAE are cut in April, the decline by the end of April would be only slight, to around 50%.

“For longer-term supply disruptions, underground gas storage can support. Based on current inventory levels, China’s underground storage can buffer Qatar supply interruptions for up to eight months,” he said.

Xiong Neng further analyzed that China’s domestic natural gas self-supply capacity is continuously improving, especially in unconventional fields like Sichuan shale gas and Shanxi coalbed methane, which have seen rapid increases in recent years. The trend of increasing production and storage is expected to continue during the 14th Five-Year Plan.

At the same time, natural gas’s share in China’s power energy mix is relatively low, and the country’s vigorous development of renewable energy sources like photovoltaics and wind power is also reducing demand for natural gas in power generation. Additionally, coal continues to play a stabilizing role in China’s energy system, further strengthening the backup capacity for energy supply.

“Overall, natural gas imports do not pose a significant obstacle to China’s power sector, and LNG inventories can buffer short- and medium-term Qatar supply gaps. Therefore, from an LNG perspective, this crisis has limited actual impact on China,” said Xiong Neng.

Liang Yinghan also stated that thanks to China’s diversified supply structure, domestic natural gas production can compensate for some reduction in imports. As temperatures rise, Central Asian countries’ heating demand is limited, and they may increase natural gas exports to China. Thus, aside from LNG imports, other supplies will provide some flexibility to ensure China’s natural gas consumption remains stable.

Erica Downs, Senior Research Fellow at Columbia University’s Center on Global Energy Policy, shared a similar view, noting that China has tools to respond to Middle Eastern oil and gas supply disruptions, including strategic and commercial crude oil reserves.

“China has been building and replenishing strategic reserves for over twenty years, precisely to handle such situations. China has stored 1.4 billion barrels of crude oil, so even if Middle Eastern imports are completely cut off for six months, China still has enough reserves to maintain supply,” she said.

Compared to China, Europe’s situation is more complex.

Karen Pittel, Director of the Energy, Climate, and Resources Center at the IFO Institute in Germany, told JiJie News that after heavy investments in LNG terminals over the past three years due to the Russia-Ukraine conflict, physical channels for natural gas remain open. It is unlikely that Europe will face the same physical shortages of natural gas experienced in 2022.

Europe’s risk has shifted from “can we buy natural gas” to “can we afford it.”

On March 9, the Dutch TTF natural gas futures price surged about 30%, reaching €69.5 per MWh, doubling compared to before the crisis.

Pittel explained that Germany still hosts many energy-intensive industries, and its energy structure has not been fully transformed. “Since the new government took office, there is even a trend of returning to natural gas in German industry,” she said. “To compensate for the intermittency of wind and solar power, backup units are essential.”

George Zachmann, senior researcher at the Bruegel think tank, told JiJie News that the EU’s direct dependence on Qatar gas is not high, but if supply tightens, the cost of winter storage in Europe could rise sharply.

“Should Qatar’s gas production cease long-term, global LNG prices will be pushed higher. Since the EU’s wholesale gas price (TTF) reflects marginal import costs, wholesale prices could soar,” Zachmann said.

He also pointed out that losing Qatar’s gas supply could weaken the EU’s leverage against U.S. supplies. The U.S. might establish a de facto monopoly in Europe, manipulating supply to control prices.

Customs data shows that in LNG, the U.S. is the EU’s largest supplier, accounting for 50.7%, far surpassing Russia (17.0%) and Qatar (10.8%).

Regarding whether the EU might turn back to “Russian gas” under pressure, Pittel was negative. She believes that despite the economic temptation of high prices, the political consensus in the EU remains to cut energy ties with Russia: “I am not worried that Europe will forget Ukraine.”