MIDDLE EAST CRISIS - WHY LNG THREATENS MORE THAN OIL - Filenews 25/3
By Ken Silverstein
Iran has attacked Qatar's industrial city of Ras Lafan — the world's largest liquefied natural gas (LNG) export hub — in recent days with a barrage of missiles, causing fires at several facilities, with QatarEnergy speaking of "extensive damage" to a complex that had already been severely damaged by previous drone attacks.
The attack took place just hours after Israel struck Iran's South Pars gas field — the first time Israel has targeted Iranian gas infrastructure. The energy status in the world has changed.
While everyone is keeping an eye on oil prices, the most significant—and long-term—impact concerns the LNG market. Gas infrastructure has become a weapon, as in the Russia-Ukraine conflict. However, the planet has no strategic reserves, no emergency reserves, no quick fixes. The problems that will arise in the coming weeks and months will not be measured in barrels, but in heating, electricity and fertilizers, while the impact will be felt globally.
Before the start of the war on February 28, global gas prices were relatively stable. When QatarEnergy halted production on March 2 after the first drone attacks, prices nearly doubled within a week. Since then, spot prices of LNG in Asia have soared to the $20 per MMBtu level, according to Wood Mackenzie's director of research, Miaoru Huang. After the missile attack on Ras Lafan, gas prices in Europe rallied 24% and in the UK 23% in a matter of hours.
The disruption of the supply chain resulted in the loss of approximately 5.8 million tons of LNG from global markets in March — about 14% of the amount that customers around the world were expected to receive this month. Meanwhile, the Strait of Hormuz, the sea route through which a significant part of the world's energy passes, has effectively been closed, with dozens of tankers now idle off the coast, according to Kpler, which monitors ship movements in real time.
"Unfortunately, there is no spare capacity in the LNG market, so the disruption in the market will be immediate and huge," commented Florence Yu, an analyst at Vortexa. Yu noted that 20% of the world's LNG and 90% of Qatar's LNG exports pass through the Strait of Hormuz — At the heart of the conflict. Qatar accounts for 20% of the world's LNG supply.
There are no strategic gas reserves
The world of oil includes the International Energy Agency and hundreds of millions of barrels of strategic reserves that governments can make available in the event of an emergency. The world of LNG has nothing like it. The international community has devoted decades to building a safety net for oil crises. He never created something similar for natural gas. This omission just became everyone's problem.
Even if the war were to stop tomorrow, Ras Lafan cannot simply be put back into operation. Installation requires a careful restart process that takes weeks before it can produce and ship even one load. But that's the least of the problems. The damage from repeated missile attacks is so severe that it is estimated that it will take up to five years to fully repair it — and no repair crews can get in until the conflict is over.
Qatar's energy minister has confirmed that disruptions to Qatar's LNG exports may last much longer than initially thought, and that a complete cessation of hostilities is needed before restart work can begin. Production is an issue. The transport of gas is another. Ali Jabbar, an American citizen of Iraqi descent who works as a crisis management specialist, told me that transportation costs and insurance premiums influence the decisions made.
"Chartering a ship to transport LNG can be very costly — sometimes around $400,000 a day," he explains. "In addition, premiums have increased significantly, and many companies are reluctant to take the risk."
The gap cannot be filled by increasing production from other countries. The United States and Australia — the two most obvious alternatives — are already producing as much LNG as their facilities can handle. There is no production capacity available that remains unused, ready to be put into operation. Nigeria, Algeria and Trinidad have their own supply constraints. If you make realistic calculations about what the rest of the world can produce, not even the 2 million. tons of the 5.8 million. tons that have been lost from the market in March alone.
The countries facing the most acute and immediate problem are not Japan or South Korea, as most people assume. In fact, the most vulnerable is Taiwan, as it relied on Qatar and the UAE for 35% of its LNG imports in 2025. Taiwan shut down its last nuclear power plant in mid-2025 and withdrew several coal plants, leaving it with almost nowhere else to turn to for electricity generation. India is equally exposed, importing about 58% of its gas from the Middle East, according to Wood Mackenzie. Singapore draws 27% of its supply from the same region.
Are there alternative suppliers?
Some analysts argued that the market overreacted and that alternative suppliers would eventually fill the gap. This view may have been plausible a week ago, but it is very difficult to support now that Qatar's gas field has been bombed. Ras Lafan is not a route changeable pipeline. It is not a tanker that can change course. It is a complex industrial facility that has been hit twice in three weeks, with damage that, according to engineers, will take three to five years to fully repair.
The optimistic scenario calls for a complete end to the conflict, the restoration of safe passage through Hormuz, and a two-week restart process — all without another attack. Goldman Sachs warns that prices could more than double from current levels if the Strait remains closed for another month. Europe survived a similar crisis in 2022 — but because it had months to prepare.
Tom Kloza, senior energy consultant at Gulf Oil, clearly laid out the broader stakes in Open Magazine: "Can you imagine the world's reaction if Iran were targeting something outside the Persian Gulf — a refinery in Rotterdam or a facility somewhere in the United States? Then everything will be uncertain and prices could reach beastly levels."
The world has spent 50 years developing a system for managing oil supply crises — strategic reserves, spare production capacity, and the ability to reroute tankers in no time. It created almost nothing similar for LNG, as this type of infrastructure was considered outside the conflict sphere. This assumption was shattered in this war.
What is already clear is that the crisis will accelerate investment in LNG in the United States, Australia and Canada — countries that have the resources and stability to become reliable global gas suppliers. Turmoil is painful. The growth it will cause may eventually reshape global energy trade for decades.
