FIRST TAKE: Israel strikes on Iran and conflict escalation BULLISH for Platts JKM/TTF prices Eric Yep *Israel attacks Iran’s nuclear facilities and military sites in steepest escalation of conflict in recent years *Market concerns around scale of Iran’s retaliation and level of US involvement, although US has distanced itself from Israel’s actions *Any targeting of LNG shipping and energy infrastructure is not an immediate threat, but still on the escalation ladder; both LNG exporters and importers are assessing risks Israel’s military strikes on Iran have opened the door for further escalation of the conflict in the region, which is BULLISH for Platts JKM and TTF prices in the near term. Israel said it conducted strikes on Iran’s nuclear enrichment facilities and other military targets, and Iranian state media reported senior military leaders killed in the air strikes. Immediate risks are around retaliation by Iran and the extent to which the US gets dragged into the conflict. So far, the US said it was not involved in the strikes, but this is still an unprecedented level of escalation in the conflict. Benchmark gas prices will be boosted by risk sentiment in the near term and attract financial flows from investment houses taking speculative positions and repositioning holdings. But there will have to be another level of escalation for the conflict on the ground to spread to physical shipping and gas/port infrastructure, and we are not quite there yet. The Gulf states of Qatar, UAE and Oman are exposed to shipping risks from the Strait of Hormuz, and the Gulf Cooperation Council has in the past distanced itself from Israel’s military ambitions and emphasized its neutrality to Iran. Whether the US uses its military bases in allied states against Iran and the positioning of US aircraft carrier strike groups in the Red Sea and Persian Gulf will be indicators to watch for an escalation. Asian importers like India, China, Japan and South Korea exposed to Middle East LNG supply are also assessing energy security risks during heightened tensions. Overall, de-escalation pathways have yet to be exhausted as the conflict progresses. A retaliation by Iran however does endanger nearly 3 Bcf/d of gas production from Israel’s three offshore gas fields — Leviathan, Tamar, and Karish. An Iranian missile launch in October 2024 had led to a precautionary one-day shutdown of at least two fields. The gas is exported to Egypt and Jordan, and cutting off their supply would push the demand over to the LNG market for incremental cargoes. Read on Platts Connect: https://tinyurl.com/3ynm2wp8