Iran War Disrupts Global LNG Supply, Reshapes Energy Markets

The escalating conflict in the Middle East, involving the United States, Israel, and Iran, is significantly disrupting the global liquefied natural gas (LNG) supply chain. Successive Iranian attacks on Qatar’s LNG facilities are creating a ripple effect, impacting emerging Asian economies and creating opportunities for the United States and Russia to expand their market share.

Qatar’s LNG Production Severely Impacted

Recent Iranian missile attacks on Qatar’s Ras Laffan complex, the world’s second-largest LNG production facility, have caused substantial damage. Saad Al-Kaabi, CEO of QatarEnergy, estimates that 17% of the company’s LNG export capacity has been affected, equating to an annual production loss of 12.8 million tons. CBS News reports that recovery could take three to five years.

Emerging Asia Faces Gas Shortages

The disruption to Qatari LNG exports is particularly acute for emerging Asian countries heavily reliant on the fuel. India and Pakistan, which source approximately 80% of their LNG from Qatar and the United Arab Emirates, are already experiencing supply shortages. Pakistani authorities have warned of potential electricity demand issues as early as mid-April, threatening the country’s export-oriented textile industry. The Hani reports that restaurants and hotels in India are temporarily closing due to cooking gas shortages. The Philippines and Vietnam have suspended gas purchases until prices stabilize, as shipping costs for LNG have more than doubled since the start of the conflict.

South Korea and Taiwan Respond

Taiwan and South Korea are also taking steps to secure alternative gas supplies. South Korea is easing restrictions on coal power generation to mitigate potential gas shortages.

US and Russia Benefit from Market Shift

The crisis is creating opportunities for the United States and Russia in the LNG market. US LNG producers, operating at full capacity, are seeing increased demand and stable prices. Stock prices of US LNG companies have risen following the attacks on Qatari facilities. USA Today notes that Russia, which lost its European market after the invasion of Ukraine, is poised to expand exports to China, with the “China-Russia Central Route Gas Pipeline” construction accelerated in China’s recent five-year plan.

Geopolitical Implications and Price Competition

With no immediate end to the conflict in sight, competition between Asian and European nations to secure gas supplies is expected to intensify, potentially driving up prices. Menelaos Idreos, Secretary-General of the International Gas Union, warns that wealthier nations will likely continue to purchase LNG, potentially excluding poorer countries from the market. The difficulty of replacing volumes transported through the Strait of Hormuz further exacerbates the situation.

US Strikes and Escalation

The conflict continues to escalate, with the United States having struck over 7,000 targets across Iran, and continuing attacks deeper into Iranian territory. CBS News reports the Pentagon is requesting an additional $200 billion in war funding. Israel has also conducted strikes within Tehran, targeting infrastructure of the “Iranian terror regime.”

Trump’s Role and Strait of Hormuz

US President Donald Trump is reportedly pressuring American allies to help secure the Strait of Hormuz, which Iran has effectively closed following attacks by the United States and Israel. CNN reports that Trump is also denying prior knowledge of Israel’s strike on Iran’s South Pars gas field, but has threatened further action if Qatar’s LNG facilities are targeted again.