The war between the United States, Israel, and Iran has caused the global oil, fuel, and LNG import bill to swell by an estimated $330 billion between March and August. This increase occurred despite a smaller-than-feared rise in oil and gas prices. The conflict, described as the most significant Persian Gulf disruption since the 1990 Gulf War, has led to elevated prices and could continue to impact energy costs even after the war concludes, due to tight global fuel supplies from damaged refining capacity in the Middle East and Russia.
The data, compiled by the Finland-based Centre for Research on Energy and Clean Air (CREA), indicates that crude oil accounted for nearly half of the additional import costs, totaling $164.1 billion. Diesel and gasoil added $73.8 billion, gasoline $35.7 billion, liquefied natural gas (LNG) $38 billion, and jet fuel $20 billion.
Europe experienced the most significant financial impact, with its energy import bill surging by $78 billion. This is attributed to the EU's high dependence on imported energy, particularly from the U.S. and Norway, following sanctions on Russian hydrocarbons and limited domestic production.
China followed, paying an extra $35 billion. As the world's largest crude oil and LNG importer, China's reduced imports after the initial price surge, coupled with the use of its substantial stockpiles, may have mitigated a more severe global oil price crisis.
India faced the third-largest financial hit, with an additional $22 billion spent on energy imports. Its high dependence on oil imports, especially from the Middle East, made it vulnerable to disruptions caused by Iran's closure of the Strait of Hormuz.
Other Asian countries also incurred significant costs due to the war-related price increases. CREA noted that the conflict and subsequent price surges have curbed demand for fuel commodities, and their calculations reflect actual purchases rather than potential ones.
The impact on energy prices is expected to persist. LNG prices in Asia have averaged 75% higher than pre-war expectations, and in Europe, they have been 60% higher. Both regions face potential shortages heading into winter, necessitating increased purchases.
Oil prices remain elevated, and fuel costs have risen considerably. The International Energy Agency estimates that approximately one-fifth of the Middle East's refining capacity, totaling around 9.6 million barrels daily, has been affected by the hostilities. Combined with refinery damage in Russia from Ukrainian drone attacks, this has severely constrained global refining capacity and fuel output, likely leading to sustained higher energy bills for importers.
On a positive note, wind and solar power, along with other low-carbon energy sources, reportedly saved importers $36 billion during the March-August period, offering a small but significant offset to the increased fossil fuel costs.
