Key Moments
- QatarEnergy’s full shutdown of LNG production has led to five consecutive days without any Qatari LNG exports, the longest such pause since 2008.
- No LNG carriers have passed through the Strait of Hormuz since February 28, temporarily removing about 20% of global LNG exports from the market.
- Buyers have shifted to U.S. LNG supplies, with at least eight cargoes redirected toward higher-priced Asian markets, adding further upward pressure on European gas prices.
Extent of the Supply Disruption
QatarEnergy has suspended operations at its liquefied natural gas production complex, resulting in five days with no LNG cargoes leaving the country, based on Kpler data reported by Bloomberg. This marks the longest interval without Qatari LNG exports since 2008.
According to the same report, no LNG carrier has transited the Strait of Hormuz since February 28. This stoppage includes tankers that typically load liquefied natural gas in the UAE, temporarily removing flows that account for roughly 20% of global LNG exports.
Cause of the Shutdown and Force Majeure
QatarEnergy – the state-owned company responsible for all of Qatar’s LNG exports – announced a full halt in LNG production after Iranian drone attacks struck facilities at Ras Laffan Industrial City and Mesaieed Industrial City. The attacks occurred on March 2. Following the disruption, QatarEnergy declared force majeure on its LNG exports.
Market Reaction in Asia and Europe
The sudden loss of Qatari supply has driven gas prices higher in both Asia and Europe. Buyers have increasingly turned to U.S. LNG to fill the gap. With Asian markets currently offering higher prices than Europe, U.S. LNG cargoes that had been heading toward Europe have been rerouted to Asia.
Bloomberg data cited in the article indicate that at least eight LNG tankers have been diverted so far. This redirection has further tightened supply for Europe and fueled an additional spike in European gas prices.
| Impact Area | Observed Development |
|---|---|
| Qatari LNG exports | Five consecutive days with zero shipments |
| Strait of Hormuz LNG traffic | No LNG carriers passing since February 28 |
| Global LNG share affected | Approx. 20% of world LNG exports disrupted |
| U.S. LNG cargo flows | At least eight tankers diverted toward Asia |
Outlook for Qatari Supply and Price Effects
Operations at Ras Laffan are expected to require several weeks to restart. As a result, even a rapid easing of regional hostilities would not immediately restore Qatari LNG exports to prior levels.
Some analysts, however, see limited lasting damage to price dynamics. Rystad Energy stated last week that it does not expect any long-term impact on LNG prices from the Qatari outage, emphasizing that the disruption is likely to be temporary.
Reassessment of Global LNG Balance
The shutdown has prompted a swift rethink of earlier expectations that the LNG market could move into excess supply this year. In a recent note, Morgan Stanley said that if the Qatari shutdown extends to a full month, it would shift the global LNG market into deficit.
U.S. suppliers, while in strong demand, are not in a position to rapidly expand volumes in response to the shortfall. Their liquefaction trains are already operating at full capacity, and the incremental capacity scheduled to begin operations later this year is far too limited to offset the loss of Qatari exports.
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