Gulf LNG crisis deepens as Strait of Hormuz blockade chokes global energy and fertiliser supplies

What changed

The United States–Israeli military campaign against Iran has brought shipping through the Strait of Hormuz to a near standstill, severing one of the world’s most critical energy arteries. The waterway normally carries roughly 27 percent of all seaborne oil and 20 percent of global liquefied natural gas, according to industry data. With passage now blocked to most commercial vessels, Gulf producers have been forced into emergency responses — Saudi Arabia is rerouting crude through overland pipelines, while QatarEnergy has halted LNG output entirely at its Ras Laffan and Mesaieed complexes.

The shutdown, confirmed on March 2, marks the most severe disruption to Gulf energy flows in recent memory.

What happened

• Qatar’s LNG production suspended. QatarEnergy ceased operations at both major liquefaction sites after Iranian strikes targeted energy infrastructure, according to reports from the facility. Qatar exported more than 77 million tonnes of LNG in 2024, placing it among the top three global suppliers.

• Oman’s Salalah port closed. A drone attack on March 11 struck the southern Omani port, which hosts a major ammonia storage terminal. The closure compounds supply disruptions for fertiliser feedstock across the region.

• Fertiliser output collapsing. Gulf nations supply close to half the world’s traded urea, a cornerstone of global agriculture. With natural gas serving as both feedstock and fuel for manufacturing, producers across the Gulf have suspended or scaled back operations — including what was the world’s single largest urea plant in Qatar.

• Helium supply at risk. Qatar’s cryogenic gas processing accounts for roughly a third of global monthly helium output — an estimated 5.2 million cubic metres per month. Helium is essential for MRI and CT scanner cooling as well as semiconductor heat management in data centres.

Context

Natural gas accounts for about a quarter of worldwide energy consumption, making LNG a linchpin for import-dependent economies across Asia. The five largest LNG importers in 2024 — China, Japan, South Korea, India, and Taiwan — together absorbed nearly 59 percent of all global shipments, according to the International Gas Union’s 2025 World LNG Report.

South Asia faces the sharpest immediate danger. Qatar and the United Arab Emirates together supply roughly 99 percent of Pakistan’s LNG imports and 72 percent of Bangladesh’s, according to trade intelligence firm Kpler. Gas generates 28 percent of Pakistan’s electricity and half of Bangladesh’s. Islamabad has already shifted government workers to a four-day week and declared extended school closures since mid-March. Dhaka has curtailed domestic gas distribution and is seeking nearly $2 billion in emergency lending to stabilise energy prices.

The conflict’s economic shockwaves extend well beyond hydrocarbons. Petrochemical derivatives extracted during LNG processing — ethylene and propylene — feed the production of medical-grade plastics including IV bags and syringes. Any prolonged shutdown of Gulf processing facilities tightens supplies for healthcare systems worldwide.

What to watch

The critical question is whether naval escort arrangements or diplomatic pressure can reopen even limited passage through the Strait of Hormuz. Some tankers bound for India have managed to transit the waterway, and at least one Pakistani vessel has crossed, suggesting the blockade is not yet absolute. However, if the military confrontation intensifies or spreads to additional Gulf infrastructure, energy-importing nations face the prospect of rationing measures that could last well beyond the fighting itself.