Iran will take revenge and it will also be felt in Finns’ wallets

The prices of oil, fuel and natural gas rose sharply on Monday, as shipping traffic in the bottleneck area of ​​the Strait of Hormuz in the Persian Gulf has practically stopped. At the same time, the attack on Iran launched by the United States and Israel on Saturday clearly seems to be escalating faster than was estimated on Saturday.

The strait connects the main oil countries of the Persian Gulf, such as Saudi Arabia, Iran, Iraq, Oman and the United Arab Emirates, to the open Arabian Sea and is therefore the world’s most important oil traffic bottleneck.

According to the IEA, 27 percent of the world’s oil flows and 19 percent of LNG gas pass through the strait each year.

Iran’s Supreme Leader Ali Khamenein death has left a power vacuum in Iran, but there is a gamble going on, the winner of which is unknown, and the ability of the United States to influence Iran’s political future is limited.

Iran has vowed revenge and struck, among other things, Saudi Arabia’s and the entire Persian Gulf’s largest refinery in Ras Tanura, which, for example, was attacked by Yemen’s Houthi rebels in 2021. The refinery, which was closed due to the attack, is Saudi Arabia’s main oil export terminal in the Persian Gulf.

Qatar Energy announced on Monday that it will shut down liquefied natural gas (lng) production at the Ras Laffan refinery. Ras Laffan is the most important LNG refinery in the world.

In different estimates, analysts believe that Iran is ready to drag the entire Persian Gulf energy sector into the conflict. The most feared scenario is not the closure of the Strait of Hormuz, but serious and extensive damage to the key oil and gas infrastructure in the Persian Gulf.

Their destruction would be poison especially for the economy of Europe and also of China. Rebuilding the infrastructure would not only be expensive, but also slow.

The oil and LNG production problems in the Middle East would hit Finland through the corner. Although Finland has five months’ reserve stocks of oil and oil products and Inkoo’s gas ship has just been replenished, many other EU countries do not have such a good situation.

EU countries that use a lot of gas, such as Germany, have 52 terawatt hours of gas left in their gas storage, while the country consumes 904 terawatt hours of gas per year. In France the situation is relatively the same and in the Netherlands the situation is even worse. Only the southern European countries and Poland have a reasonably good situation.

Finland’s meager economic growth is already taking a hit, as fuel pump prices have risen by up to tens of cents per liter at some stations. With the price increase, inflation rears its head again. Even bigger problems will arise if growth falters in Finland’s important export countries in Europe due to gas supply problems.

The only thing certain at the moment is uncertainty. President of the United States Donald Trump said on Sunday that a war in Iran could last four weeks or less. However, forecasting in the Middle East crises is challenging. Most of the time it has gone to the forest.