WHILE Middle Eastern oil exports have rebounded in recent weeks, Qatar's vast liquefied natural gas export facilities remain hobbled.
Until a durable resolution of the US-Israeli war with Iran is reached, Gulf shipments will be heavily curtailed, leaving the global LNG market seriously strained.
Qatar is the world's second-largest producer of LNG behind the United States. It accounts for around a fifth of global capacity at nearly 80 million metric tonnes per year.
The Iran war, now in its eighth month, has dealt a heavy blow to Qatar. The country was forced to shut down much of its main LNG complex at Ras Laffan shortly after the start of hostilities and the closure of the Strait of Hormuz.
Iranian missile attacks also knocked out around 17 per cent of Qatar's export capacity, costing the country tens of billions of dollars in lost annual revenue and inflicting damage that could take years to repair.
The economic blow has been among the biggest in the region. The International Monetary Fund forecasts Qatar's gross domestic product will contract by 8.6 per cent in 2026, compared with pre-war expectations for 6.1 per cen t growth.
The severe disruption to Qatar's LNG exports, alongside a drop in exports from neighbouring United Arab Emirates, has sent shockwaves through global gas markets.
The supply hit was partially cushioned by a sharp increase in US exports, which rose by around 14 per cent in 2026 from a year earlier to 123 million tonnes — but the gap in the global LNG market remained large.
The impact was felt most acutely in Asia and Europe, which rely heavily on LNG imports and have limited alternatives to replace disrupted Gulf supplies. Asian and European LNG prices hit their highest level since early 2023 in late September, nearly tripling from pre-Iran war levels.
While QatarEnergy, the country's national energy company, has indicated it will be able to restart LNG production within weeks once Hormuz reopens, LNG importers should not get too optimistic.
A deeper look at Qatar's current situation suggests its LNG industry won't be returning to pre-war norms any time soon.
The outlook for Gulf crude exports certainly has improved. Iran's grip on Hormuz appears to have weakened in recent weeks, allowing a sharp increase in oil exports from the region.
Middle East crude shipments through Hormuz rose in September to around 80 per cent of pre-war levels at 16 million barrels per day, according to data analytics firm Kpler.
Producers appear increasingly confident transiting the waterway with US Navy support, even as Iran's strikes on shipping have risen in recent weeks to the highest number since the war began.
The increase in exports has allowed Saudi Arabia, the UAE, Kuwait and Iraq to raise domestic production meaningfully.
Yet LNG traffic in the Gulf has barely recovered.
While Qatar's LNG exports rose in September to their highest level since the start of the conflict at 1.6 million tons, that was still less than a quarter of the pre-war average, according to Kpler.
Importantly, around a third of September's exports went to Kuwait, meaning they stayed inside the Gulf. The remaining volumes went to China, India and other Asian countries, with tankers typically switching off their satellite navigation systems when crossing Hormuz.
The outlook isn't improving. Qatar's October LNG exports are on track to fall sharply to just 0.6 million tons, according to Kpler, probably as a result of the rise in attacks on ships.
And last month QatarEnergy extended force majeure notices, signalling that it remains unable to deliver LNG cargoes to many customers in Asia and Europe.
The contrast between the recovery in oil exports and stagnant LNG exports reflects fundamental differences in how the two industries operate.
Oil systems are flexible. They can restart relatively quickly and benefit from extensive storage and shipping logistics. LNG supply chains, on the other hand, are highly integrated, capital intensive and far less tolerant of disruption.
Qatar's LNG facilities consist of 14 production units — known as trains — supplied by gas from the offshore North Field, the world's largest gas reservoir, which the country shares with Iran.
North Field production has been running at minimal rates since the start of the war, just enough to meet Qatar's domestic needs and maintain limited exports.
Restarting the system is not simply a matter of reopening a terminal or dispatching a few tankers.
To increase LNG exports, Qatar would first need to raise gas production. And that is where the logistical challenges become quite complex.
The raw gas extracted from the North Field contains large volumes of very light oil known as condensate, which must be separated and exported.
If condensate cannot be shipped out reliably, Qatar risks quickly running out of storage. It could then be forced to curb gas production regardless of LNG demand.
Similarly, Qatar has limited capacity to store LNG itself in onshore tanks or aboard vessels at sea, leaving little room for operational delays if exports are interrupted.
Finally, the global LNG tanker fleet is far smaller than the oil tanker fleet. Freight rates are therefore much higher, while shippers are far less willing to send expensive LNG carriers through Hormuz if there is any risk they could become trapped inside the Gulf for weeks or, worse, get hit by an Iranian strike.
Qatar therefore needs more than occasional safe passage through Hormuz. It needs assurance that all ships will be able to transit the waterway safely.
The timing is particularly unfortunate because Qatar is in the middle of a massive expansion programme that will see it raise LNG capacity to 142 million tons per year by 2030.
That would give it roughly a quarter of the global market. But new capacity is of little value if the export route remains uncertain.
Until the strait's security is governed by a credible and durable agreement involving Iran, the United States and regional powers, the world's largest LNG expansion project may remain stranded.
In the meantime, the global LNG market has little hope of a speedy recovery.biggest news in markets and finance seven days a week.
* The writer is from Reuters
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