Middle East conflict disrupts LNG supply but prolonged price surge unlikely, Rystad says

By Romel S. Gurky

Escalating conflict in the Middle East has sharply tightened global natural gas supply after LNG production in Qatar was halted and maritime traffic through the Strait of Hormuz stopped, but the resulting price spike is unlikely to persist, according to analysis from Rystad Energy.

Global gas prices surged following the disruptions, with Europe’s benchmark Title Transfer Facility rising more than 52% on March 2. Natural gas prices overall have climbed by more than 40% since the escalation of the conflict.

The supply shock came after QatarEnergy halted LNG production at its Ras Laffan facilities following a drone strike on March 2, while shipping through the Strait of Hormuz stalled amid security concerns.

The halt affects Qatar’s entire liquefaction capacity of about 77 million tonnes per year.

Despite the sharp market reaction, Rystad Energy said the long term impact on global gas and LNG markets may be limited if the disruption proves temporary.

Jan Erik Fahnrich, senior analyst for gas and LNG research at Rystad Energy, said the scale of supply losses will depend on the duration of the disruption and the extent of any damage to infrastructure.

Read also : Indonesia secures alternative crude supplies as Pertamina tankers remain in Hormuz

If production is halted for around 15 days with limited damage, global LNG output in 2026 could decline by about 3.3 million tonnes, equivalent to roughly 4.3% of expected production. A longer disruption could remove about 5.6 million tonnes from the market, while a four to five week interruption could cut around 11.2 million tonnes from annual supply.

However, the firm expects production in Qatar to resume within weeks rather than months given the country’s central role in global LNG trade.

In a worst case scenario, additional LNG supply could partly offset the losses. Opportunistic producers could bring as much as 15 million tonnes of additional LNG to the market, while the possible return of Russian LNG could add up to 18 million tonnes if sanctions were eased.

Even so, analysts consider the large scale return of Russian LNG unlikely because it would require sanctions relief and renewed purchases by European buyers.

Rystad said the impact of higher gas prices will likely be felt most strongly in price sensitive emerging markets such as Bangladesh and Pakistan, which are more likely to reduce gas consumption or switch to alternative fuels such as thermal coal rather than compete aggressively for LNG cargoes.

The market disruption comes as global LNG supply had already been expected to grow in 2026, with new production and restarts including the Darwin LNG project in Australia expected to add volumes to the market.

Editing by Alexander Ginting