Weeks of War Are Reshaping Global Gas Market for Years to Come

Summary

• The war remains on an escalatory path, with three key oil market risks: Strait of Hormuz closure (20% of global oil flows), shut-ins in Gulf producers (nearing 10 million barrels per day), and damage to energy infrastructure.
• Damage to energy infrastructure is the most severe risk, as it can take months or years to repair, leading to prolonged supply disruptions.
• Qatar's Ras Laffan LNG plant, the world's largest, has suffered extensive damage (17% of the facility), with repairs estimated to take up to three years.
• This damage is bullish for oil and gas prices, as evidenced by rising Brent benchmarks and higher LNG prices.
• Countries heavily reliant on Qatari LNG, such as Pakistan, will face significantly higher gas prices and increased living costs.
• Disruptions are likely to trickle down to other regions if the war continues, amplifying global energy market impacts.
• If the war ends, oil markets would take weeks or months to return to pre-war levels due to widespread supply chain disruptions.
• Restarting shut-in production is not instantaneous; it requires time to regain pressure and capacity, adding to supply constraints.