S&P: If Middle East conflict continues, downstream costs of Asian oil and gas companies may rise.

Analysts at Standard & Poor's Global Ratings stated in a report that the prolonged conflict in the Middle East could harm the risk resistance of Asian oil and gas companies. Approximately one-fifth of the world's crude oil and liquefied natural gas supply passes through the Strait of Hormuz, with nearly 90% of the crude oil and half of the liquefied natural gas supply flowing towards Asia. If the supply disruption continues, oil and gas companies may need to change shipping routes, procure from elsewhere, or increase domestic production. These analysts suggest that such measures will increase unit costs. The analysts wrote, "In the event of prolonged conflict, oil and gas giants in the region will face downstream cost increases, which may offset any unexpected profits gained in the upstream sector."