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 settled.

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 Corporation 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 to Jiemian 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 Jiemian 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 shipowners and companies 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 to discuss the Iran 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 Jiemian 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 rising oil prices enable 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 stated 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 new export project investments. 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 large long-term contracts linked to the Henry Hub price can exploit the widening price gap between the U.S., Europe, and Asia for resale arbitrage. The spread for U.S. gas resale 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 of Middle Eastern oil demand.”

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

Refineries heavily dependent on Middle Eastern crude oil are directly affected by supply disruptions and have been forced to cut production first. In contrast, refineries with lower Middle Eastern oil proportions 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 Jiechao Energy, to Jiemian News.

However, Xu Muyu mentioned that some independent refineries can still maintain stable production. “Most domestic independent refineries mainly source from Iran and Russia. 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 person from a state-owned refining enterprise told Jiemian News that recent crude oil imports have been significantly affected. Currently, the crude 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 China’s domestic refining industry already faces overcapacity and low operating rates. Coupled with a dependence of over 70% on crude oil imports, yet with continuous growth in refined oil exports.

“This industry structure is unreasonable and unsustainable in the long run. 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 Jiemian News that under the impact of the U.S.-Iran conflict, China’s LNG imports will decrease, but the overall supply impact remains limited.

Liang noted 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 LNG analyst Xiong Neng told Jiemian News that as of the end of February, China’s liquefied natural gas inventory level was about 53%. Even if imports from Qatar and the UAE are cut in April, the level would only slightly fall to around 50% by the end of April.

“If supply disruptions last longer, underground gas storage can support. Based on current inventories, 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 gas fields. Production from Sichuan shale gas and Shanxi coalbed methane has increased rapidly over the past two years, and this trend is expected to continue during the 14th Five-Year Plan period.

At the same time, natural gas’s share in China’s power generation is relatively low, and the country is vigorously developing renewable energy sources like photovoltaics and wind power, which also reduces 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.

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 may decrease, potentially increasing natural gas flows to China. Besides LNG imports, other supply sources will provide 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 specifically 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 faces a more complex situation.

Karen Pittel, Director of the Energy, Climate, and Resources Center at the Ifo Institute in Germany, told Jiemian News that after investing heavily in LNG terminals over the past three years due to the Russia-Ukraine conflict, Europe still has physical channels for natural gas. It is unlikely that Europe will experience the same physical shortages of natural gas as in 2022.

Europe’s risk has shifted from “whether it can buy natural gas” to “the affordability of natural gas.”

On March 9, the Dutch TTF natural gas futures price surged about 30%, reaching €69.5 per megawatt-hour, doubling compared to before this 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 Research Fellow at the Bruegel think tank, told Jiemian 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.

“Once Qatar’s gas production stops 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.

Furthermore, 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 shift 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.”