The enduring closure of the Strait of Hormuz critical to global energy flows is challenging the assumption that uninterrupted access through this corridor can be taken for granted, Rystad Energy said in its commentary "The broken glass: The Strait of Hormuz and the new energy equilibrium."
The Gulf's enduring importance will remain even if that assumption begins to change, but it may redefine how resilience is valued together with geology and cost and prompt investors to look more favorably on other origins, Rystad's commentary said.
The article drew parallels with the Second Law of Thermodynamics that states that ordered systems move towards disorder unless energy is constantly provided to sustain them.
That law shows that if something is broken, that it's repair or recreation can never result in something identical to what went before.
The commentary says that recent events have shattered the assumption of continual availability of the Strait of Hormuz as an energy export corridor. While public debate focused on the immediate status of the strait itself, markets were thinking more about the vanishing of the assumption that the strait could always be relied on.
The point of the article appears to be the idea that the ability for ships to pass freely again through the strait may not be the most central issue for the global energy system now.
Rather, it's that the global energy system needs to recalibrate based on the knowledge that the permanent availability of the strait can no longer be counted upon.
"Iran does not need to dominate the Gulf militarily, nor permanently close the Strait, to impose meaningful costs on the global energy system. It needs only to convince market participants that uninterrupted passage can no longer be assumed," the article said.
"Higher insurance premiums, precautionary inventories, deferred investment and increased freight costs become the economic consequences of uncertainty rather than the physical destruction of vessels. The objective is not necessarily to deny access, but to erode confidence in the system itself."
Contemplating how markets would respond to the realization of long-term uncertainty, the article draws parallels with the Second Law of Thermodynamics which states that restoration of order is not automatic or without cost.
"The Gulf remains home to some of the world's largest and lowest cost hydrocarbon resources, and neither geology nor economics has fundamentally changed. What has changed is confidence. The assumption of uninterrupted passage that underpinned decades of investment will not be restored to what it was before this disruption," the article said.
It suggests that producers like Brazil, Guyana, Canada and the US will emerge with an advantage from the chaos, given their competitive resources and resilient global market access. While Gulf producers would remain "indispensable", other origins would become relatively more attractive.
In the longer term, deepwater exploration could grow in attractiveness while technological advances could also lead to replication of shale development beyond the US and Argentina.