Coincidence? The World’s Energy Infrastructure Keeps Getting Hit

A tanker route becomes dangerous. The pipeline built to bypass it is attacked. Refining and LNG capacity go offline while winter approaches. The causes differ, but the pressure lands on the same energy system. Energy infrastructure is increasingly being attacked, damaged, sabotaged or simply failing at the worst possible time. The latest example is Enbridge. On October 12, another horizontal drilling rig and supporting equipment being used on the $1 billion Line 5 reroute in northern Wisconsin was destroyed by fire. Enbridge says graffiti was found at the site and called it the second major act of vandalism against construction equipment on the project. A September fire had already destroyed or heavily damaged drilling equipment, while another fire occurred at an Enbridge facility in Superior. The FBI and ATF are investigating the earlier incidents. [1]

On its own, that is an Enbridge story. Put it beside what is happening around the rest of the world and it gets more interesting.

Start With Hormuz

The Strait of Hormuz is not completely closed, and that distinction matters, but it is nowhere near normal either. Roughly 20% of global crude and LNG supply normally moves through this narrow stretch of water. Vessel traffic recently fell to its lowest level in more than two months following a new wave of tanker attacks. On one day last week, only seven commodity vessels passed through the strait. Crude movements through Hormuz had fallen to about 10.1 million barrels per day, roughly 74% of prewar levels, with producers scrambling to compensate through Red Sea terminals, Gulf of Oman transfers and alternate routes. At least seven tanker attacks were reported during one recent week, including vessels struck by unknown projectiles. [2]

This is where the market can become misleading. Middle Eastern crude exports have actually recovered surprisingly well because producers have found workarounds. That can make the supply situation look healthier than it really is. The oil exists, but moving it has become much more difficult and expensive. OPEC and non OPEC ministers said on October 12 that shipping and insurance costs on some energy movements have risen to more than one third of the value of the commodity itself. Heavy oil is now piling up in the Americas even while refiners in Europe and Asia are searching for barrels because freight has become prohibitively expensive. Reuters reported that moving a cargo from the U.S. Gulf Coast to Asia can now cost as much as $80 million, or roughly $40 per barrel. [3]

That is an energy crisis hiding inside a logistics crisis.

Then They Hit the Backup Route

Saudi Arabia provides one of the clearest examples of why this matters. As Hormuz became unreliable, Saudi Arabia began pushing enormous volumes through its East West Pipeline toward the Red Sea. Around 4 million barrels per day, roughly 4% of total world oil supply, was being moved across the country specifically to reduce dependence on Hormuz.

Then the backup pipeline was attacked.

Drone strikes in September forced the system to temporarily shut down and interrupted crude loadings at Yanbu. Saudi Arabia has since restored the pipeline and recently pushed volumes as high as 5.8 million barrels through the system, but think about the sequence. One of the world’s most important maritime chokepoints becomes dangerous, so Saudi Arabia leans heavily on the route designed to bypass it. That route is then attacked as well. [4]

This is why energy executives are suddenly talking about moving from a “just in time” system to a “just in case” system. For decades, excess pipelines, extra storage and redundant export routes looked inefficient. Now redundancy looks like national security. Companies are discussing new routes through Iraq, Syria, the Mediterranean and the UAE precisely because one pipeline or one shipping lane can no longer be assumed to remain available. [5]

Qatar Shows How Long the Damage Can Last

Oil gets most of the attention, but natural gas may be the bigger winter risk. Iranian attacks earlier this year damaged Qatar’s LNG infrastructure badly enough to wipe out approximately 17% of the country’s export capacity. QatarEnergy says some of that capacity could take three to five years to restore. Qatar is one of the largest LNG exporters on Earth, so this is not equipment that can simply be replaced in a few weeks. In September, Qatar’s LNG exports were still only around one quarter of prewar levels. [6]

Then came another explosion at Qatar’s enormous Ras Laffan energy complex in June. Thirteen people were killed and 66 were injured when the Barzan gas processing facility exploded shortly after restarting from maintenance. Qatar’s government said this was a technical accident and specifically said it was not sabotage. For energy markets, the damage adds to the supply problem regardless of the cause. A missile can remove processing capacity. So can an industrial accident. Either way, another piece of energy infrastructure has disappeared from a system already dealing with war damage. [7]

That is the theme I keep coming back to. It does not have to be a conspiracy for the consequences to accumulate.

Russia’s Refineries Have Become Military Targets

In Russia, there is no mystery about what is happening. Ukraine has deliberately turned oil refineries, fuel depots and energy logistics into targets. The Moscow refinery was forced to halt crude processing after a September drone strike caused fires in both of its primary crude processing units. The facility normally produces millions of tonnes of gasoline and diesel every year. Similar attacks have hit other Russian refineries and contributed to domestic fuel pressure and restrictions on refined product exports. [8]

This exposes another weakness in the way investors traditionally look at oil supply. A country can still produce millions of barrels of crude every day and yet suffer a fuel shortage if it loses enough refining capacity. Crude oil is not gasoline. It is not diesel. It is not jet fuel or heating oil. The refinery in between is every bit as important as the well producing the oil.

The Middle East has the same problem. Crude exports have recovered much faster than refinery operations. Reuters reported this week that Middle Eastern refined fuel exports remain at less than half of prewar levels even as crude flows rebound. That is one reason diesel markets remain extremely tight despite there being plenty of crude somewhere in the world. [9]

And Then There Are All the Other Fires and Explosions

Not every incident has anything to do with war. That may actually be what makes the current situation more concerning.

In August, a blast ripped through a petroleum storage facility at the Port of Rotterdam, Europe’s largest port and one of the most important oil and fuel hubs in the world. One person was killed and six were injured. The explosion occurred during maintenance on a Gunvor storage tank. Police said there was no immediate evidence of sabotage and were investigating the cause. [10]

Libya’s Zawiya oil complex was hit by explosive laden drones in August, setting fuel storage tanks on fire and collapsing a tank containing roughly 4.5 million litres of gasoline. No group immediately claimed responsibility. Libya’s National Oil Corporation warned that continued attacks could force it to declare force majeure. [11]

Then in September, ExxonMobil’s 275,000 barrel per day Joliet refinery in Illinois was knocked offline after a power outage, followed by flooding that overwhelmed a pump and complicated the restart. Joliet normally produces about 11 million gallons of gasoline and diesel per day for the U.S. Midwest. There is nothing suspicious about a utility failure and flood on their own, but once again the result is the same: major refining capacity disappears while worldwide diesel supplies are already tight. [12]

War. Drone attacks. Sabotage. Industrial explosions. Power outages. Flooding. Hurricanes. Different causes, same direction.

Now Come Back to Enbridge

That brings us back to Line 5. In August, an unoccupied subcontractor truck rolled into an excavation in Wisconsin and struck the pipeline, releasing propane and butane and forcing Line 5 offline. Enbridge built a temporary bypass and eventually returned the system to service. That incident remains under investigation but has been treated as an accident. [13]

Then came the September drilling equipment fire. Then the fire at Enbridge’s Superior office. Now another drill rig has been destroyed in October, with graffiti found at the site and Enbridge calling the latest incident vandalism. The infrastructure itself has become the pressure point. The Line 5 reroute is supposed to resolve one of the pipeline’s largest long term legal problems. Repeatedly destroying specialized equipment does not have to shut Line 5 today to potentially interfere with its future. [1]

The strategic vulnerability is plain: modern economies depend on a small number of facilities and routes that are expensive, slow and difficult to replace.

Winter Is Where This Gets Dangerous

Europe is now approaching winter with gas storage expected to be only around 75% to 78% full by November 1, well below normal levels. European natural gas prices have already risen more than 150% this year. Qatar and other Middle Eastern LNG disruptions have intensified competition for the cargoes Europe needs to refill storage, and analysts are warning that even a normal winter could leave inventories uncomfortably low by spring. [14]

Oil markets are losing their cushion too. Chevron CEO Mike Wirth said recently that the global energy system is more fragile now than it was earlier in the Iran conflict and that buffers for oil and refined fuels continue to thin. Industry executives say readily accessible oil inventories have fallen dangerously low after enormous releases from emergency reserves. The G7 has now agreed to another 100 million barrel crude and diesel reserve release to relieve fuel prices. [15]

Nobody knows whether this winter will be brutal. It might not be. That is not really the point. A healthy energy system should be able to handle a cold winter. The concern is that we may be entering this one with damaged LNG capacity, reduced refining capacity, expensive shipping, tanker attacks, impaired maritime routes and strategic inventories already being drawn down.

There is less room for the next surprise.

The TrendStockers Take

These incidents have different causes, and the reporting does not establish coordination. Their combined effect is the story: fewer reliable routes, damaged capacity and less room for another outage.

Energy infrastructure is increasingly becoming a target, and when it is not being targeted, accidents and weather are exposing just how little redundancy exists in the system. The world spent decades optimizing energy infrastructure for efficiency. Pipelines were expected to run. Tankers were expected to sail. Refineries were expected to operate. LNG facilities were expected to remain available. Spare capacity looked wasteful.

That calculation is changing.

The next major energy investment theme may not simply be higher oil or natural gas prices. It may be the repricing of energy security itself. Pipelines with alternate routes. Storage. Tankers. Refineries. LNG infrastructure. Domestic energy networks. Anything that provides redundancy when the primary route disappears.

Maybe every unrelated explosion really is just an unrelated explosion. Maybe every accident has a perfectly reasonable explanation. Most probably do.

But markets do not care why the infrastructure disappeared.

They care that it disappeared.

And if another major refinery goes down, another Saudi pipeline is hit, tanker traffic through Hormuz deteriorates again or a cold winter arrives while Europe is fighting for LNG cargoes, we may stop asking whether an energy crisis is coming.

We may realize we have been watching it build in front of us for months.