The War With Iran Isn’t Causing a U.S. Oil Crisis — Yet

The start of a U.S. war in the Middle East has historically induced significant oil-market panic. But on Monday, the markets broke with history and popped prices less than most analysts anticipated.

The spike in Brent oil prices Monday was significant compared to price changes over the course of the past year or so, but the increase did not even break the top 50 largest for a single day.

The reason? Over the last decade, the United States has transformed from an energy importer into one of the world’s top energy exporters.

“There’s a much larger buffer in the global oil market,” said Ben Cahill, an energy markets expert and nonresident fellow at the Arab Gulf States Institute.

“The U.S. has contributed a lot to global energy security through this massive increase of oil and natural gas exports in the last decade, and that makes it easier to deal with an acute crisis like this,” he added. “We’re essentially a little bit more protected than some of the other parts of the world would be.”

The rising prices mean that Americans will see higher prices at the pump, higher energy prices and eventually higher prices for manufactured goods. The ongoing conflict could continue to escalate to such a degree that oil prices skyrocket far more than they have thus far. If tankers and cargo ships remain unable to transit the narrow Strait of Hormuz, which serves as a crucial global shipping corridor, the oil crisis could deepen.

But as of now, the size of the change is much less significant than what the United States has experienced during previous wars, analysts said.

For the first time in a Middle East war, the immediate global energy concern is more focused on natural gas, an area where the United States — as the world’s largest natural gas exporter — has a significant advantage.

Other nations in Europe, Asia and the Middle East have found themselves with a new and somewhat unexpected problem.

The Iranian military used drones on Monday to attack the largest liquified-natural-gas facilities in the world, in Qatar, a break from its long-standing habit of respecting the integrity of Gulf state infrastructure. In response, Qatar was forced to shut down those LNG facilities, which are responsible for producing 20% of the world’s LNG supply.

The loss of supply could quickly cause problems across Asia, the main purchaser of Qatari LNG, and Europe, which has been heavily exposed to LNG prices since the continent stopped relying on gas from Russian pipelines at the beginning of the Ukraine war. European gas prices were up about 35% on Monday.

“European and Asian prices spike and the market balances by a buyer paying up to replace lost Qatari LNG,” said Ira Joseph, an LNG expert at Columbia University’s Center on Global Energy Policy. “It’s significant.”

Joseph predicted that the global fertilizer and petrochemical industries could be among the first affected, because those industries might temporarily slow or cease production in response to price increases.

The U.S. is nearly immune to these gas price changes. Natural gas producers in the country can ramp up production if needed, and nearly all of the gas exported to other countries is already accounted for.

Some American companies may even benefit from the situation in the short term. In its Monday morning earnings call, American LNG exporter Venture Global said that the company could profit from the spiking prices.

“In the short term, the higher prices are helpful for our spreads, obviously. We probably have the largest number of available cargoes in the market,” CEO Michael Sabel said on the call.

But if the conflict stretches on for the four or five weeks that Trump suggested during a press conference on Monday, oil prices might react more in line with their historical patterns and the U.S. could find itself in a very tough position, Cahill cautioned.

And if Iran turns its attention from gas infrastructure in Qatar to the oil tankers waiting for passage on either side of the Strait of Hormuz, the situation would become even more dire.

“This is really early days. This is a very unpredictable situation. Were the attacks against tankers or the targeting of energy infrastructure, I think it will definitely have a big market impact,” Cahill said.