Explainer: how the Iran conflict is disrupting global LNG and helium supplies

The war in the Middle East has brought shipping through the Strait of Hormuz to a near-standstill, choking off a critical artery for the global energy market. With Qatar halting its massive liquefied natural gas (LNG) production, the disruption is creating a severe economic shockwave that extends far beyond energy prices.

What is LNG?

LNG is natural gas that has been cooled to -162°C, shrinking its volume 600 times to create a liquid that is safe and efficient to ship across oceans. It is a vital fuel for power generation, heating, and industrial processes worldwide, accounting for about a quarter of global energy consumption.

How has the conflict disrupted the market?

The conflict has effectively closed the Strait of Hormuz, through which 20% of the world’s LNG supply passes. In response to attacks, Qatar, the world’s third-largest LNG exporter, has halted all production. This has had an immediate and severe impact:

• Energy Crisis in South Asia: Nations like Pakistan and Bangladesh are critically dependent on Qatari LNG for electricity generation. Pakistan, where gas provides 28% of electricity, has introduced a four-day work week for government employees to save energy. Bangladesh, where gas accounts for half of all power, is seeking nearly $2 billion in emergency loans to fund energy imports.
• Fertilizer Production Halted: Natural gas is the primary ingredient for producing urea-based fertilizers. With Gulf nations exporting nearly half the world’s traded urea, the LNG halt has forced fertilizer plants across the region to shut down. This threatens to increase food prices globally.

What are the hidden consequences?

The LNG disruption has created a critical shortage of an unexpected commodity: helium.

Helium is extracted from natural gas during the liquefaction process. The shutdown of Qatar’s LNG facilities has instantly removed an estimated one-third of the global monthly helium supply from the market.

Why does the helium shortage matter?

This has profound impacts on healthcare and technology:

• Medical Imaging at Risk: Helium is essential as a cooling agent for the superconducting magnets in MRI and CT scanners. The average MRI machine requires about 1,700 liters of liquid helium. A prolonged shortage could disrupt diagnostic medical services worldwide, delaying patient care.
• Semiconductor and Data Center Impact: The tech industry also relies on helium. It is used to protect and cool silicon during the semiconductor manufacturing process and to cool equipment in large data centers. A shortage could impact the production of everything from smartphones to the servers that power the internet.
• Plastics and Medicine: Other by-products of natural gas processing, like ethane and propane, are used to make medical-grade plastics for IV bags, syringes, and other essential hospital supplies.

Who are the biggest players?

The U.S., Australia, and Qatar are the top three LNG exporters, accounting for over half of the global supply. On the import side, China, Japan, and South Korea are the largest consumers. The current crisis highlights the vulnerability of countries that rely heavily on a single supplier or a single, contested shipping lane.