Global energy markets could face a prolonged period of tight supply and volatile prices as disruptions in the Middle East continue to strain the industry.
Senior executives from Shell and Equinor said the market has become less able to absorb further supply shocks. Their comments came at an industry conference in Oslo on Wednesday.
Crude prices moved toward $110 a barrel this week. That marked their highest level since May. Refined fuels have climbed even more sharply, with diesel prices reaching record levels.
Energy Market Shock Absorbers Are Weakening
The energy market has shown surprising resilience since the US-Israeli war with Iran began in late February.
Adam Ritchie, chief economist at Shell Trading, said the industry had managed to offset much of the disruption.
Shell estimates that the crisis has removed about 36 million metric tons of liquefied natural gas from the global market. That volume equals the combined LNG imports of Britain and France last year.
The disruption has also affected about 1.6 billion barrels of crude oil and condensates, according to Ritchie.
Several factors have helped limit the impact. Weaker Chinese demand has reduced pressure on supplies. Energy companies have also drawn down inventories and used flexible shipping capacity.
Additional pipeline capacity and higher production in the Americas have provided further support.
However, Ritchie said these buffers are now becoming weaker.
He warned that prolonged disruption could leave energy markets more exposed to another major supply shock.
Energy Disruptions Could Last Into 2027
Restoring disrupted shipping routes and other energy chokepoints may not immediately bring prices back to normal.
Ritchie said bottlenecks across shipping, production and supply chains could delay a full recovery. He expects those problems could continue into 2027 if no further damage hits energy infrastructure.
Once supplies stabilise, markets will also need to rebuild depleted inventories.
Ritchie said that restocking could place additional pressure on global supplies well into next year and possibly beyond.
That could keep energy prices under pressure even after major transport routes reopen.
Europe Faces Winter Gas Pressure
European gas markets face their own challenges ahead of winter.
Gas storage levels remain well below seasonal averages. As a result, weather conditions could play a major role in determining prices.
Equinor CEO Anders Opedal said European prices will also depend on LNG supplies moving through the Strait of Hormuz.
Competition from Asian buyers could add further pressure. European consumers may therefore face tighter supplies if demand rises in both regions.
Opedal said the market has fewer buffers than it had at the start of the conflict.
He expects consumers to feel the effects of weaker supply protection over the coming months.
The outlook remains uncertain. Continued disruptions could keep prices volatile, while any additional damage to energy infrastructure could increase pressure on already stretched global supplies.
