In early March, the Ras Laffan plant in Qatar, one of the largest exporters of liquefied natural gas (LNG), was forced to suspend operations following a strike by an Iranian drone. This marked the first significant disruption in supply from this facility in over thirty years of operation.
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Global Implications for the Energy Market
The closure of the strategic Strait of Hormuz immediately led to a spike in energy prices. The cost of gasoline and aviation fuel is rising, while India is experiencing a gas shortage for cooking, provoking conflicts among the population, and farmers are concerned about potential shortages of diesel fuel and fertilizers. The situation is exacerbated by the lack of significant LNG reserves, strategic stocks, and alternative supply sources.
“We are already on the path to an apocalyptic-scale gas crisis scenario. Even after the war ends, LNG supply disruptions could last for months or even years—depending on how long it takes to repair the damage,” said Saul Kavonik, an energy analyst at MST Marquee.
The scarcity of supplies and delays in restoring exports through Hormuz pose risks not only for developing countries but also for developed nations in Europe and Asia. Experts emphasize that a prolonged shutdown of the Qatari plant could lead to serious energy supply disruptions for the world’s largest economies. Researchers from Rystad Energy highlight that in the event of a six-month interruption, even large consumers could face significant shortages and price increases to levels seen in 2022.
Rising Costs and Competition for Resources
Amid the crisis, the price of a shipment of LNG heading to Asia has reached around $80 million—double what it was before the onset of hostilities in Iran. Vietnam and the Philippines have temporarily suspended additional purchases, awaiting a price drop, while Indian energy companies are forced to buy gas at record-high prices. Pakistan, which has already experienced widespread power outages due to a price surge in 2022, is taking emergency measures to reduce consumption.
In Europe, restrictions traditionally hit the chemical industry and large manufacturing the hardest. Meanwhile, the U.S. and Australia are benefiting from their reputation as more reliable suppliers, although the question of their ability to quickly ramp up volumes remains open.
It is also noted that Russia continues to supply LNG to China, attempting to compensate for the loss of the European market. According to a recently published five-year plan, the Chinese government is accelerating the implementation of the “Power of Siberia 2” pipeline project, although Beijing continues to emphasize the importance of diversifying energy resource sources.
European and Asian countries find themselves in fierce competition for limited LNG volumes, which could trigger a price war between regions. Traders are already considering the possibility of redirecting shipments in search of more favorable spot contracts, similar to the situation in 2022.