Pakistan’s Energy Crisis: How the War on Iran Turned an LNG Surplus into a Shortage
At the beginning of 2026, Pakistan found itself in an unusual position: it had more imported liquefied natural gas (LNG) than it could actually use. However, a sudden escalation in regional conflict has flipped this surplus into a looming energy disaster. The disruption of global energy markets, triggered by the war between the United States, Israel, and Iran, has left Pakistan bracing for severe gas shortages just as peak summer demand approaches.
The Catalyst: Operation Epic Fury and the Strait of Hormuz
The energy stability of the region shattered on February 28, when the United States and Israel launched Operation Epic Fury. This military operation involved hundreds of strikes targeting Iranian leadership, military infrastructure, air defenses, and missiles, resulting in the death of Supreme Leader Ali Khamenei.
Iran responded by firing hundreds of drones and missiles across the region. This retaliation effectively brought traffic to a standstill in the Strait of Hormuz. Because roughly 20% of the world’s oil and gas passes through this narrow waterway, the closure has created a massive bottleneck for global energy supplies.
The Rapid Shift: From Surplus to Shortage
The crisis is particularly jarring because Pakistan was managing an oversupply only months ago. Between 2021 and late 2025, LNG demand dropped from 8.2 million tonnes to 6.1 million tonnes. This decline was driven by two main factors: a flood of cheap solar panels in the market and reduced industrial activity as factories cut back.
To manage this surplus, the government had been shutting down domestic gas wells and selling excess shipments to other nations. Now, that strategy has left the country vulnerable. Pakistan is heavily dependent on a few sources, with Qatar and the United Arab Emirates providing 99% of its LNG imports.
Impact on Power Generation
The consequences for Pakistan’s power grid are severe. LNG contributes more than one-fifth of the country’s total power generation. With supplies expected to fall to near zero starting next month, the energy sector is facing a critical gap. When combined with pressure on coal availability, the total impact is expected to create a power shortfall of nearly 30%.
Emergency Gas Management Plan
To prevent a total collapse of the energy network, the Pakistani government has implemented an emergency gas management plan. The strategy prioritizes residential and domestic users although sacrificing industrial output.
- Fertilizer Sector Cuts: The government has suspended approximately 78 million cubic feet per day (mmcfd) of LNG supply to the fertilizer industry.
- Terminal Slowdowns: Regasification rates at two LNG terminals have been slashed from 500 mmcfd to just 100 mmcfd.
- Strategic Reserves: The country is currently processing supplies from two vessels received before the conflict began to extend coverage through the end of March.
- Domestic Recovery: To ease pressure, 350 mmcfd of domestic gas—which was previously curtailed to maintain pipeline pressure—has been brought back online.
- Primary Cause: The closure of the Strait of Hormuz following Operation Epic Fury.
- Import Dependency: 99% of Pakistan’s LNG comes from Qatar and the UAE.
- Power Risk: A potential 30% shortfall in power supply due to LNG and coal shortages.
- Immediate Action: Prioritizing residential gas while cutting supply to the fertilizer sector.
Frequently Asked Questions
Why did Pakistan have an LNG surplus in early 2026?
The surplus was caused by a three-year decline in demand, largely due to the widespread adoption of cheap solar panels and a reduction in factory operations.
What is the Strait of Hormuz and why does it matter?
The Strait of Hormuz is a narrow waterway through which about 20% of the world’s oil and gas flows. Its effective closure by Iran has blocked the primary route for LNG imports from the Middle East to South Asia.
Which sectors are most affected by the current gas rationing?
The fertilizer sector has seen significant cuts, and industrial power generation is under pressure, while the government attempts to shield residential consumers from the shortage.
What happens next?
Pakistan’s ability to withstand this crisis depends on the duration of the Middle East conflict. While emergency measures are in place, a prolonged closure of the Strait of Hormuz could lead to a sustained energy crisis as the country enters the peak summer demand season.