It is early days into this ceasefire and there is huge uncertainty around whether it holds and, if it doesn’t, what it means for future negotiations and strikes on energy facilities. For what it’s worth, our baseline scenario is that the conflict de-escalates and energy flows through the Strait of Hormuz, begin to resume around late-April. In that scenario, it will still take time for the oil market to return towards normalcy, given the volumes of production that have been shut-in, damage to refineries in the Middle East and the time involved with shipping oil around the world. That said, the scarring in global natural gas and LNG markets will be more permanent, given that 17% of Qatar’s existing LNG export capacity will be offline for 3-5 years due to damage sustained. So, while we forecast oil prices to ease lower by the end of the year, we expect EU natural gas and Asia LNG prices to edge higher.
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