How LNG scarcity is reshaping the global economy
The scale of what has been lost
Qatar accounts for approximately 20 per cent of global LNG supply. In 2025 alone, it exported 80.97 million metric tonnes, virtually all of it transiting the Strait of Hormuz, but now nearly 20 per cent of global LNG flows had been sidelined due to physical damage that may be harder to reverse.
Sectoral and geographic impact
The structural problem with restarting LNG flows
Even a ceasefire tomorrow would not restore supply quickly. Qatar Energy’s CEO was explicit: “For production to restart, first we need hostilities to cease.” Beyond that, two damaged LNG trains face three-to-five year rehabilitation timelines. Once Ras Laffan completes its shutdown procedure, it will take a minimum of two weeks before gas can begin being converted back into super-chilled fuel, and a further two weeks to reach full production capacity on undamaged trains. Alternative supply cannot simply be switched on as the US, Qatar, Australia, and Malaysia are already operating at 100 per cent export capacity, leaving India and other buyers with almost nowhere to turn except sanctioned Russian LNG.
Global supply-demand and the inventory buffer
The crisis arrives at the worst possible moment for European inventories. The EU’s five-year storage deficit doubled since the start of the 2025-26 heating season to 16 billion cubic metres, with inventory levels now standing 30 per cent below their five-year average — a position that was already driving forecasts for record LNG imports in 2026. EU-wide storage stood at just 48 per cent on January 20, compared with the five-year average of 63 per cent. and that was before the Ras Laffan crisis. In the US, storage was 5 per cent above seasonal averages at the start of winter, but US LNG facilities are already operating near capacity, and US storage levels going into winter 2026-27 could be the lowest since 2022.
India: The structural victim
No major economy has been struck with more surgical precision. In FY2024, India imported 27.8 million metric tonnes of LNG; Qatar supplied 11.30 MMT worth $6.4 billion — nearly 47 per cent of total imports. Supply cuts of up to 40 per cent have been imposed on industrial customers and city gas distribution companies. The government has directed priority gas allocation toward households, power generation, and the fertiliser sector, ordering industrial users to curtail consumption and explore fuel switching. But fuel switching has its own cost: replacing contracted Qatari volumes with spot LNG at more than double the contracted rate is eroding CNG’s price advantage over electric vehicles potentially triggering a permanent modal shift that the gas distribution sector will not recover from.
Alternative options by geography
For Asia: the pivot is toward US LNG (with a $4–8/MMBtu premium over disrupted Qatari contract prices), Australian spot cargoes, and Russian LNG at discounted but politically sensitive rates. Early signs suggest US LNG tankers originally bound for Belgium are being redirected toward China — a competition that Europe will likely lose on cost. For Europe: demand reduction mandates, coal and nuclear extensions, and aggressive bidding for Atlantic Basin cargoes are the tools available — but with gas prices having risen 35 per cent in a single session on March 19 alone, the political economy of energy rationing is already arriving at the doorstep of governments across the continent.
The Outlook: Years, not weeks
(Disclaimer: This article is by Mohammed Imran, research analyst. Mirae Asset Sharekhan. Views expressed are his own.)
