Publication
The new energy premium
Access, not reserves
Testimonial
"A low-cost molecule stranded behind a geopolitical chokepoint is worth considerably less than one supported by multiple routes and buyers."
Publication
Access, not reserves
Author: Jack Allen-Fitt
The disruption to the Strait of Hormuz has done more than create a temporary supply shock, it has exposed a more fundamental question regarding security of supply for the global energy system. Having access to abundant, cheap-to-produce energy resources is not the same as having secure, deliverable and financeable energy supply - at least not where that access is concentrated in one or two resource basins.
The scale of this exposure is significant. Before the current crisis, almost 20% of global LNG supply moved through Hormuz. In 2024, 83% of LNG transiting the Strait was destined for Asia, with China, India and South Korea together accounting for 52% of those flows. Following the de facto closure in March 2026, LNG loadings from Qatar and the UAE fell by around 35 bcm year-on-year between March and June. Higher production from North America, Africa and elsewhere replaced around three-quarters of that lost supply, but global LNG production still contracted by 4%. [1][2]
That matters because the first lesson from the closure of the Strait of Hormuz was that the elasticity in production has limits. Newly discovered resources, of the size needed to compensate for Hormuz, are not sitting around waiting for a global supply shock to immediately switch on production. With time, new resources can fill the gap if the necessary capital investment is made into their discovery and development.
The second lesson was that energy security means resilience in the entire route to market: production, pipelines, liquefaction, shipping, storage, terminals and regasification. A low-cost molecule stranded behind a geopolitical chokepoint is worth considerably less than one supported by multiple routes and markets.
That is already reshaping infrastructure priorities. The UAE, for example, is accelerating pipeline capacity towards Fujairah, building on existing infrastructure that allows crude to reach the Arabian Sea without passing through Hormuz. Across the region, alternative export routes, storage and port capacity are becoming strategic assets rather than ancillary infrastructure. [3]
And despite increased LNG movements through Hormuz in recent weeks, trade has not simply returned to the pre-crisis model. September saw the highest number of LNG transits since the conflict began, but shipping continues to carry elevated security and cost considerations. [4] The logistics of shipping have also been made more complex with ship-to-ship transfers occurring on the exit of the Strait of Hormuz tying up vessel capacity and stressing global freight markets. In the many forward-looking scenarios, there are almost none which suggest a return to how things were before. Those that involve some form of return to normal for access to shipping also contemplate increased costs to transit through access charges and re-escalation risks leading to increased chartering costs.
Any build-out of infrastructure to bypass the Strait of Hormuz to the Gulf of Oman will inevitably increase the costs of production for the low-cost molecules consumers have become used to relying-on, but the Gulf states have concluded that the infrastructure premium is worth the cost to secure their ability to deliver to global energy markets.
The energy scenarios and implications may well differ by market.
For Europe, solutions for the latest disruption build on the diversification that followed Russia's invasion of Ukraine. The EU imported 101 bcm of LNG in 2024, with the US accounting for 45% and Qatar around 13%. The lessons from recent events in the Middle East emphasise that Russia was not a black swan event and highlight Europe’s reliance on the supply of hydrocarbons from outside European borders, including the United States, which creates further economic vulnerability and places new pressure on domestic energy policy. [5]
For Asia, the issue is more complex. High spot prices and disrupted supply have already encouraged demand management and fuel switching: the IEA estimates Asian gas consumption declined around 0.5% in the first half of 2026, with Chinese LNG imports down 12% year-on-year during March to June. [6] For now, Asia is supplying the flex in the system by managing demand and shouldering the majority of the burden. It is likely that the conversation around decarbonisation will take on increasing social dimensions driven by lower-income countries’ inability to access molecules in this high energy price environment.
Global gas demand had reached an all-time high only two years earlier, increasing 2.7%, or 115 bcm, in 2024, with emerging Asian economies responsible for around 40% of incremental demand. Gas therefore continues to play a dual role: as a transition fuel and an energy-security asset. [7]
For producers outside of the Middle East, for example in Africa and South America, the opportunity is correspondingly broader. Increased domestic and global demand will support upstream development provided that those resources, once developed, can be competitive in a lower oil price environment, but it also supports LNG, pipelines, petrochemicals investment and export infrastructure as new market opportunities in Europe are opened through the shut-off of Russian gas.
There will also be a desire for global sovereign wealth to be invested in multiple basins as a natural hedge against future geo-political risks.
Delivering more resilient supply requires access and prioritisation of capital towards infrastructure assets. Prioritisation in energy infrastructure will need to sit alongside investment in strategic defence and technology partnerships.
One source of capital is to monetise existing assets and recycle capital into new capacity while retaining strategic ownership. Pipeline, storage and processing assets can attract institutional and infrastructure capital. We expect these trends to continue, as operators seek to access the widest possible pool of liquidity to fund ambitious capex programmes.
Capturing more value from each molecule continues to be a priority for natural resource companies globally. Trading partnerships are a way in to trading expertise and capture incremental gains in overall returns. Investment in the downstream can capture more value from each molecule through refining, petrochemicals and other derivatives provided investors can overcome the same market access concerns.
Elsewhere, the commercial focus is increasingly on producing and processing hydrocarbons and their derivatives more efficiently and with lower emissions: refinery upgrades, lower-carbon petrochemicals, tail-gas treatment, methane and flaring reduction, CCS and more efficient gas infrastructure.
Infrastructure build on the scale required to meaningfully impact security of supply would historically have engaged significant third-party debt. There is no reason to think this time will be different. Any incoming debt provider is going to focus on project bankability which has in the past centred on familiar fundamentals: the quality of the resource, sponsor strength, managed construction risk, certainty of revenues and creditworthy counterparties. Those fundamentals remain, but resilience is becoming part of the bankability equation.
Lenders and investors will increasingly ask: ‘Can the product reach more than one market? Is there route redundancy? How exposed is the project to a single terminal or chokepoint? Is there sufficient storage? How flexible is the offtake structure? What happens to revenues if shipping is interrupted?’
Alongside conventional project finance and strategic equity, private capital, infrastructure funds, hybrid/off balance sheet debt, mezzanine structures and JVs can help operators finance expansion or monetise existing infrastructure without necessarily surrendering operational control. This is bearing out in the strategic asset monetisations and joint ventures and in synthetic sell-downs of upstream reserves and the adoption of hybrid debt for asset development (including rigs and FPSOs).
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What’s important to emphasise is that none of this means the energy transition has stopped. Rather, energy security and decarbonisation are no longer seen as alternatives in the way they might once have been. Grid-scale renewables are seen as a security boon – reducing the exposure to volatile international energy markets.
However, despite these headwinds renewables and nuclear continue to expand globally; in the Middle East, their combined share of power generation nearly doubled between 2015 and 2024 to almost 15%. [8] The UAE's expected share of power by 2030 is contingent on the successful implementation of the UAE Energy Strategy 2050. The strategy aims to triple the contribution of renewable energy and increase the share of clean energy in the energy mix to 30% by 2030. [9]
The result is a more pragmatic energy system in which renewables, gas and traditional hydrocarbons increasingly coexist rather than follow a neat sequence of substitution.
Infrastructure build-out to increase the security of supply trumps long-term expensive hydrocarbon extraction, whilst the deployment of more renewables, energy storage and gas-to-power form the core strategy of most governments and major energy companies.
Recent events have therefore exposed a broader truth. The next premium in energy will not attach simply to whoever owns the resource. It will attach to supply that can be reliably taken to market, infrastructure that provides optionality, assets that can be efficiently monetised and projects capable of remaining bankable through disruption and, lastly, those supporting long-term electrification and dependence.
[1] U.S. Energy Information Administration, "About one-fifth of global liquefied natural gas trade flows through the Strait of Hormuz", 24 June 2025.
[2] International Energy Agency, Gas Market Report Q2 2026.
[3] Reuters, "UAE to accelerate oil pipeline project to help bypass Hormuz", 15 May 2026.
[4] Reuters, "September LNG shipments through Hormuz hit highest since start of US-Iran war", 2 October 2026.
[5] European Commission, Quarterly Report on European Gas Markets, Q4 2024.
[6] International Energy Agency, Gas Market Report Q2 2026.
[7] International Energy Agency, Global Energy Review 2025 - Natural gas.
[8] Internal Energy Agency, Middle East Outlook
[9] UAE Energy Strategy 2050.
