Key facts
- Tanzania's $42 billion LNG project is gaining appeal due to Middle East conflict impacting the Strait of Hormuz.
- The Strait of Hormuz is a critical energy chokepoint, and recent events have challenged the assumption of its uninterrupted function.
- Iran's strategy involves creating uncertainty to impose costs on the global energy system.
- Qatar's LNG exports have been slashed by 96% amid the U.S.-Iran war.
- European gas storage has fallen to a historic low for the time of year.
Tanzania's significant liquefied natural gas (LNG) project is experiencing increased interest due to geopolitical tensions surrounding the Strait of Hormuz, a crucial global energy transit corridor. The recent disruptions have challenged the long-held assumption of uninterrupted passage through the Strait, prompting capital to reassess risk and seek a new equilibrium in energy investments. Qatar, a major LNG exporter, has seen its exports slashed by 96% amid the U.S.-Iran war, losing $24 billion in sales and exporting only 18 cargoes compared to 509 in the same period last year. This has led to European gas storage falling to a historic low for the time of year. Iran's strategy involves creating uncertainty about passage to impose costs on the global energy system, rather than permanently closing the Strait. The capacity to absorb pressure over time is a significant factor in Iran's leverage. Capital is expected to reassess risk and seek a new equilibrium in energy investments, with investors incorporating a different assessment of risk into long-term capital allocation decisions.