The ongoing conflict in the Middle East is posing a significant threat to the stability of global gas markets, according to consultancy Wood Mackenzie. QatarEnergy has declared force majeure on liquefied natural gas (LNG) shipments originating from its Ras Laffan export hub. This action effectively removes approximately 20 per cent of the global LNG supply from the market, sending shockwaves through the industry. Wood Mackenzie is a global leader in commercial intelligence for the energy, chemicals, metals and mining industries. The company provides analysis and data to help clients make strategic decisions.
Simon Flower, chairman and chief analyst at Wood Mackenzie, suggests that the repercussions of this disruption could potentially rival the impact of Russia’s invasion of Ukraine on gas markets. He emphasised that the long-term effects would depend on the duration of the disruption and the extent of damage to gas and LNG infrastructure within the region. The situation has already triggered a sharp increase in European gas prices, which have nearly doubled since March 3 as markets react to the sudden supply shock.
Wood Mackenzie anticipates that this crisis will likely accelerate existing efforts by LNG buyers to diversify their supply sources, reducing reliance on the Middle East. The consultancy also warns that prolonged high prices and supply concerns could jeopardise as much as 200 million tonnes per annum of projected LNG demand growth across Asia over the next decade. This potential reduction in demand highlights the far-reaching economic consequences of the current instability.
Ultimately, the severity and duration of the Middle East conflict will determine the long-term impact on global gas markets. The declaration of force majeure by QatarEnergy serves as a stark reminder of the vulnerabilities within the energy supply chain and the potential for geopolitical events to disrupt market stability.
