The world’s energy safety net is buckling

 For decades, liquefied natural gas acted as the global economy’s reliable escape valve during energy crises, keeping factories humming and homes warm.

Now, LNG has become the battlefield itself.

The war in Iran has fractured every node of the regional LNG supply chain. Iranian strikes on Qatar, one of the world’s top LNG producers, have damaged its Ras Laffan facility, knocking out some 17% of its capacity for up to five years, and delayed the country’s massive expansion plans. On Tuesday, QatarEnergy declared force ​majeure ​on some of ⁠its LNG supply ​contracts, including ‌customers ⁠in China, ​South ​Korea, Italy and Belgium.

Meanwhile, shipping through the Strait of Hormuz, which usually carries around a fifth of global LNG, is paralyzed. Buyer confidence in Gulf supply has also been undermined.

Even if the Trump administration and Iran agree to end the war soon, the consequences for the LNG market will be long-lasting—and even more profound than for oil, experts say.

Unlike crude, the world has no major strategic gas reserve to tap in an emergency. While some Middle Eastern oil can bypass the Strait of Hormuz through overland pipelines, Qatari LNG lacks alternative exits. Liquefaction facilities, meanwhile, are highly specialized engineering megaprojects that take years to construct and significantly longer to repair than conventional oil fields.

“Even if the war ends overnight, it will take the gas market much longer to return to normal than oil,” said Adi Imsirovic, a former energy-trading executive and lecturer at the University of Oxford. “A lot of the slack in the system used to be picked up by LNG, so the knock-on effects are massive.”

The LNG crunch threatens wealthy nations with a prolonged wave of energy-driven inflation, while simultaneously forcing fragile emerging economies to ration fuel and shutter factory floors. It also jeopardizes global crop yields—gas is a vital fertilizer feedstock—and could cripple semiconductor production by slashing helium supply, a natural gas byproduct.

This new reality undermines LNG’s longtime reputation as a geopolitical safety net. When Russia strangled Europe’s pipeline supply of gas following the invasion of Ukraine in 2022, seaborne LNG cargoes swiftly helped fill the void. Following the Fukushima disaster in 2011, LNG shipments absorbed the shock of Japan shutting down its nuclear reactors and kept the power grid running.

“This is a directional shift for the gas market: from expecting more supply flexibility over time to confronting tighter balances and greater infrastructure risk,” said Jan-Eric Fähnrich, senior analyst at consulting firm Rystad Energy. “What matters now is not only the volume lost, but the precedent set. Once critical Gulf energy infrastructure is seen as vulnerable, buyers will price that risk for longer than the initial outage itself.”

As a result of the war, the global LNG market is rapidly devolving into a zero-sum bidding war, as tankers divert midway through transit to chase higher prices. With Qatari and U.A.E. exports choked off, Europe and Asia must aggressively compete for spare capacity from the U.S. and Australia.

Some 11 LNG tankers originally bound for Europe have been diverted to Asia since March 3, according to data provider Kpler. Last week, the La Seine—a tanker stretching nearly three football fields in length and carrying cargo it had loaded in Plaquemines LNG terminal in Louisiana—changed course mid-voyage. The tanker headed toward a higher-paying buyer in Asia instead of an import terminal in western France, Kpler data shows.

The fallout from the Iran war is disproportionately impacting Asia, according to Rystad. China is the largest importer of Qatari LNG, buying roughly one-quarter of its exports, while India imports about 10%. Developing countries in Asia, which get most of their LNG from the Gulf, are in a particularly difficult spot as they are being priced out.

Pakistani officials warned that LNG imports will dry up by mid-April. Spot market alternatives cost around $24 per million British thermal units, compared with $9 under the Qatari contract, they said. Bangladesh restricted air conditioning and closed universities.

The immediate crisis is compounded by the derailment of future supply.

Before the attacks, Qatar’s massive North Field expansion was expected to flood the market with new LNG starting later this year.

Gulf infrastructure damage and logistical paralysis are now set to postpone these plans. Rystad estimates expansion delays of up to a year, while Ras Laffan could take five years to restore.

“A global gas market that was expected to be oversupplied (and cheap) will now become undersupplied (and expensive),” consulting firm Eurasia Group wrote in a report to clients.

As the top LNG exporter, the U.S. stands to reap a windfall during the shortage, though adding new export capacity will take years. Still, executives warn that steeply elevated prices could trigger demand destruction and an economic slowdown.

Historically a rigid, regional market, LNG transformed over two decades into an interconnected global commodity driven by flexible U.S. shale exports and specialized tankers.

Chilled to minus 260 degrees Fahrenheit, natural gas shrinks into a liquid for tanker transport, before being re-gasified at specialized terminals. Its use has boomed, replacing coal and nuclear power in many countries. Shell expects global LNG demand to surge by up to 68% by 2040.

But the very engineering that makes LNG transportable makes its infrastructure uniquely fragile. While a damaged oil pipeline or conventional crude well can often be patched or bypassed using standard industrial equipment within weeks, an LNG liquefaction train cannot because the extreme temperatures used require bespoke steel, rigorous testing and complex thermal calibration.

“You hit something even small, it blows up, and it’s really, really hard to repair,” said Imsirovic. “It’s a nightmare.”