Global energy import bill rises by $330 billion amid Middle East conflict

The global expenditure on oil and gas imports has increased by as much as $330 billion over the six-month period from March to August, according to data released by the Finland-based Centre for Research on Energy and Clean Air. This significant rise in costs occurred despite oil and gas prices climbing less than initially feared by market analysts. The think tank described the disruption in the Persian Gulf as the most severe since the 1990 Gulf War. The figures represent the difference between the money actually paid by importers for crude oil, fuels, and liquefied natural gas, and the prices that analysts had forecast for the period before the conflict began. Although the war is not yet over, the current data indicates that the financial burden on importing nations has already reached substantial levels, with the potential for further increases if hostilities continue.

Crude oil accounted for the largest share of this additional cost, contributing $164.1 billion to the total extra import bill. Diesel and gasoil followed, adding $73.8 billion to the expenditure, while gasoline represented an additional $35.7 billion. Liquefied natural gas was $38 billion more expensive for importers than anticipated, and jet fuel incurred an extra cost of $20 billion. The European Union emerged as the region suffering the most significant financial impact, with its energy import bill surging by $78 billion compared to pre-war analyst expectations. This outcome is attributed to the bloc’s high dependence on imported oil and gas, particularly from the United States, following sanctions on Russian hydrocarbons and the lack of meaningful domestic production. Additionally, Norway, the EU’s largest local supplier, faces limits on how much it can export to the bloc.

China recorded the second-highest increase in import costs, paying an extra $35 billion over the six-month period. As the world’s largest importer of both crude oil and liquefied natural gas, China was heavily exposed to the price surge. However, the country significantly reduced its import volumes after prices rose in the wake of the initial strikes on Iran. Many analysts suggest that China’s decision to tap into its massive stockpiles, estimated at between one billion and 1.4 billion barrels at the start of the year, helped mitigate a broader global oil price crisis. India experienced the third-strongest financial impact, with an additional $22 billion spent on energy imports. India’s vulnerability is driven by its even greater dependence on imported oil and gas compared to European Union member states, much of which was previously sourced from the Middle East. This made the country directly susceptible to export flow disruptions caused by the closure of the Strait of Hormuz.

Other Asian nations also faced increased costs for crude oil, liquefied gas, and fuels. The Centre for Research on Energy and Clean Air noted that the war and resulting price surges had dampened demand for fuel commodities. The reported extra import bills reflect what importing nations actually purchased, rather than what they would have bought in the absence of the conflict. The financial pressure is expected to persist, as liquefied natural gas prices in Asia have averaged 75% higher than pre-war expectations, while European prices are 60% above those forecasts. Both regions face potential gas shortages unless they begin purchasing for the winter season immediately. Oil prices remain considerably higher than pre-war levels, and fuel costs are expected to stay elevated. The International Energy Agency estimated that up to a fifth of refining capacity in the Middle East, or 9.6 million barrels per day, has been knocked out by hostilities. Coupled with refinery damage in Russia from Ukrainian drone attacks, this has severely constrained global refining capacity and fuel output, suggesting that the fuel squeeze may outlast the conflict itself. A slight offset to these costs comes from wind and solar energy, which saved importers a total of $36 billion during the same period.