A shutdown at Qatar’s Ras Laffan LNG hub could erase the global LNG surplus expected in 2026, Morgan Stanley warned, as the West Asia war sends oil prices soaring and triggers a sharp sell-off in global and Indian markets
A production halt in Qatar, one of the world’s largest exporters of liquefied natural gas, could wipe out most of the global LNG supply surplus expected in 2026, analysts at Morgan Stanley have warned, as escalating conflict in West Asia disrupts energy markets worldwide.
In a note dated 8 March, analysts led by Devin McDermott said the shutdown could quickly tighten the global gas market if it lasts beyond a month. “Any extension in the Qatar LNG outage beyond one month quickly brings a deficit,” the analysts said.
The disruption comes at a time when the widening war involving the US, Israel and Iran in West Asia has already triggered a sharp spike in global oil and gas prices, rattling financial markets and raising concerns over a fresh inflation shock.
World’s biggest LNG hub shut
The outage has affected facilities in Ras Laffan Industrial City, home to the world’s largest LNG export complex. The unprecedented shutdown last week sent global LNG prices soaring, with prices nearly doubling within days.
While infrastructure at the plant appears largely intact, Qatar’s energy minister told the Financial Times that restarting operations and resuming cargo shipments could take weeks or even months.
Before the latest geopolitical escalation, Morgan Stanley had projected that the roughly 420-million-ton global LNG market would face a surplus of up to 6 million tons in 2026 as new projects in the US and elsewhere ramp up production.
However, the prolonged outage in Qatar could quickly erase that surplus. If there is no clear path to restarting output soon, LNG prices could surge to $30 per million British thermal units or more, the bank said.
Supply dominated by few producers
The global LNG market is heavily concentrated. The US, Qatar and Australia together accounted for more than 60 per cent of global LNG supply last year, meaning disruptions in any one of these producers can quickly tighten the market and push prices higher.
Morgan Stanley also delayed its expectations for the first shipments from Qatar’s major expansion project at the North Field. The bank now expects the first cargoes to arrive in the first quarter of 2027, removing roughly 1 million tons from its supply forecast for 2026.
Oil shock rattles global markets
The tightening outlook for gas markets comes as global crude prices have surged following the escalation of the war in West Asia.
Oil prices jumped nearly 20 per cent on Monday, hitting their highest levels since July 2022 as major producers in the region began cutting output amid fears of prolonged disruptions to energy supplies.
Global benchmark Brent Crude rose as much as 19.8 per cent to $111.04 per barrel, while US benchmark West Texas Intermediate surged more than 22 per cent to $111.24 earlier in the session.
The spike followed production cuts by Iraq and Kuwait as the conflict disrupted shipments through the strategically vital Strait of Hormuz, one of the world’s most important energy shipping routes.
Overall, crude oil prices have surged nearly 30 per cent in recent sessions, with Brent crude up about 26 per cent, heating oil rising 22 per cent and gasoline prices climbing 14 per cent — fuelling concerns about renewed global inflation pressures.
Indian markets plunge
The oil price shock triggered a sharp sell-off in global equities, including India.
On Monday morning, the
BSE Sensex plunged 2,344.63 points, or 2.97 per cent, to 76,574.27 as of 9:21 am after opening at 77,056.75. The benchmark index hit an intraday low of 76,573.01 as selling intensified across sectors.
The Nifty 50 also fell sharply, dropping 703.15 points, or 2.88 per cent, to 23,747.30, slipping below the 23,800 mark. Market breadth remained extremely weak, with 48 stocks declining and only two advancing on the index.
With inputs from agencies.
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