Credit ratings agency "Standard & Poor's" warned that the escalation of the war in Gaza into the main gas delivery channels could push Israel to completely stop exporting gas.
S&P said in a recent report that Israel's gas production has already decreased by about 50% due to the war, which also hinders Israeli gas exports to both Jordan and Egypt.
It explained that operations in the Tamar field, which produced about 10 billion cubic feet of gas, which is close to half of Israel’s production in 2022, stopped completely for a month due to its proximity to the Gaza Strip.
The agency added that Israel exported about 9 billion cubic feet of gas in total to Jordan and Egypt in 2022, explaining that Israeli gas fully meets Jordan's needs while representing about 5 to 10% of Egypt's needs.
"We believe if that were to happen, Israel's gas exports could stop completely. And we don't think many producers in the Gulf Cooperation Council (GCC) could fill that gap since most of their gas production is already under contract," read the report.
"We assume the war will remain centered in Gaza and have a low impact on Israel's neighbors, but if it spreads to important delivery channels, Egypt – which is already rationing gas – might struggle in the medium term, in our view."
Standard & Poor's indicated that this situation could eventually "hurt credit quality in the region if it escalates further."
Standard & Poor's expected that Egypt, which is already rationing gas consumption, would face a long-term gas shortage if Israel completely stopped exporting gas, especially since it did not expect gas producers in the Gulf Cooperation Council countries to be able to compensate for this; given their commitment to contracts to supply most of the quantities produced.
The lack of supplies will also harm Egypt's exports of liquefied natural gas (LNG) to Europe, as it depends on liquefying Israeli gas and re-exporting it to the continent.
The agency's report indicated that natural gas production and export operations in the Middle East are more vulnerable to being affected by the ongoing war in Gaza than oil.