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Energy disruptions

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ALL eyes are on the horrific humanitarian crisis unfolding in Gaza as a result of the biggest Palestinian-Israeli war yet. From the very beginning, fears of the conflict expanding across the Middle East have been widespread, which are now seemingly being realized with the emerging US-Houthi conflict in the Red Sea.

Beneath the geopolitical turmoil is another storm brewing on the global stage, and that concerns energy. The global energy market is in crisis for numerous reasons, and what happens in the Middle East has the potential to severely exacerbate it, impacting countries across the world.

Energy security first took a hit from the pandemic.

Then things worsened with Russia’s invasion of Ukraine. Europe, heavily reliant on Russian gas up till then, scrambled to source its natural gas from elsewhere, leaving less available for developing countries like Pakistan who cannot make up for it by becoming Russia’s new customers, since only the infrastructure connecting Russian energy to European consumers exists. More recently, various additional problems have surfaced. One is industrial action by workers at two Australian gas processing facilities owned by Chevron.

The two facilities, called Gorgon and Wheatstone, produce seven percent of the world’s supply of liquefied natural gas. The issue had been brewing for months. A renewed strike was announced by workers on October 10. Back in August, strikes against another company called Woodside Energy also caused apprehension in Australia, but were averted.

Combined, Chevron and Woodside’s Australian plants produce a tenth of the world’s LNG. Then, on October 8, a gas pipeline connecting Finland and Estonia ruptured and will be out of action until April. Many suspect sabotage by Russian actors, which would represent an incursion into NATO territory.

The current Israel-Hamas war also exacerbated the energy crisis by jeopardizing trade deals between Saudi Arabia and the USA. Now, Houthi rebels in Yemen are marking the beginning of a new year by targeting commercial shipping in order to attack Israel’s economy, prompting a coalition led by the United States to launch a military campaign against the Houthis.

All these events seem unrelated, but they actually represent disruptions cascading through the energy system. The world economy is interconnected, as is global political stability.

Economic sectors that are limited in scope but which the world depends on are a source of power. They can therefore be drivers of conflict, whether through workers who see increased leverage in their hands or hostile forces who attack energy supplies to produce an impact.

Disruption of one energy source increases global dependence on another, providing extra leverage to whoever wants to exploit it. It is possible Russia was only willing to invade Ukraine because of how dependent Ukraine’s would-be allies were on Russian energy.

If a greater conflict ensues from what is currently raging in the Middle East, it is almost inevitable that energy disruptions will rise further. Pakistan, one of the nations most vulnerable to energy shortages, must prepare a policy to weather the brewing storm.

—The writer is contributing columinist, based in Islamabad.

Email: [email protected]

 

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