The recent conflict in Israel has significantly disrupted the country’s crude oil requirements and regional gas supply. Following an attack that disabled the Haifa refinery, the largest in Israel with a capacity of 197,000 barrels per day (b/d), crude oil imports have begun to sharply decline. The decline comes at a time when seasonal demand typically increases, particularly from Caspian oil producers such as Azerbaijan and Kazakhstan.
Israeli officials hope to have the Haifa plant operational again in a few weeks, but the immediate future looks challenging. The Ashdod refinery, operating at 110,000 b/d, is currently offline for scheduled maintenance. Consequently, Israel is scrambling to source alternative fuel supplies as crude imports are forecasted to plummet from 449,000 b/d to a mere 86,000 b/d in the upcoming week.
This reduced supply is expected to come from Gabon, emphasizing the vulnerability of Israel’s energy landscape amid ongoing geopolitical tensions. The Lebanese Ashkelon import terminal, which had been sidelined due to security concerns following the Hamas attack on October 7, 2023, would have played a crucial role in meeting the increased demand that had been anticipated prior to the conflict. Traders have noted a slowdown in activities, describing the current market as subdued and hesitant.
Additionally, Israel’s decision to close various offshore gas fields over safety concerns has notable implications for Egypt’s gas supply. Often reliant on Israeli gas, Egypt must now turn to domestic production, liquefied natural gas (LNG), hydropower, or switch to burning fuel oil for electricity, leading to a significant rise in fuel oil imports. Recent data indicated that Egypt’s fuel oil imports surged to 604,000 b/d this past week, sharply up from previous averages.
As Israeli officials prioritize domestic energy needs, gas exports have also been suspended, impacting regional supply dynamics.