Gas Shock Looms as Middle East Conflict Disrupts LNG Supply
While oil price increases typically dominate headlines during Middle East conflicts, a more immediate and potentially severe threat is emerging: a disruption to liquefied natural gas (LNG) supplies. Monday saw oil prices rise 9% since the end of last week, reaching $79 a barrel, but this remains below the peaks seen after Russia’s invasion of Ukraine in 2022.
QatarEnergy Halt Sends Shockwaves Through the Market
European wholesale gas prices surged 50% after QatarEnergy, the world’s largest LNG producer, halted production following Iranian drone strikes. This represents 20% of global LNG production going offline, a significant blow to the market if sustained. Unlike oil, Qatari LNG cannot be easily diverted via pipeline and is reliant on passage through the Strait of Hormuz, where shipping has largely stopped.
Europe and Asia in the Eye of the Storm
Europe and Asia are particularly vulnerable, as major importers of LNG. Approximately a quarter of Europe’s gas supply came as LNG in 2025, with Britain averaging 21% over the past five years. Low gas storage levels in Europe following a cold winter exacerbate the situation. The US, benefiting from its shale gas revolution, remains a key LNG exporter.
UK Less Reliant, But Still Exposed
The UK’s reliance on Qatari LNG has decreased since 2022, now accounting for around 6.5% of imports compared to 69% from the US since 2023. However, the global nature of the LNG market means cargoes can be diverted based on price, potentially impacting supply to both Europe and Asia, as seen during the 2022 energy crisis.
Potential for a Repeat of 2022?
Goldman Sachs analysts warn that European gas prices could increase by 130% if disruptions through Hormuz persist for a month – a level that triggered significant demand responses during the 2022 energy crisis. Stifel analysts suggest that attempts at regime change in Iran could lead to a repeat, and potentially worsening, of the 2022 energy crisis. UK gas prices jumped from 75p a therm last Friday to 114p on Monday, though still below the peak levels of 250p seen in 2022.
Government Forecasts Questioned
The UK government’s 2025 “security of supply” report highlighted declining domestic North Sea gas production but anticipated a “robust, oversupplied global LNG market” over the next four years. Monday’s events cast doubt on this forecast.
Frequently Asked Questions
- What is LNG?
- Liquefied Natural Gas is natural gas that has been cooled to a liquid state for easier transportation.
- Why is the Strait of Hormuz important?
- It’s a critical shipping lane for oil and LNG, and disruptions there can significantly impact global supply.
- How will this affect household energy bills?
- Higher wholesale gas prices typically translate into higher consumer bills, potentially leading to a spike similar to the 2022 energy crisis.
Pro Tip: Monitor energy market news closely for updates on supply disruptions and price fluctuations. Consider energy efficiency measures to reduce your consumption and mitigate potential bill increases.
Explore our other articles on global energy markets and geopolitical risk for further insights.
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