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Iran's Attack On Qatar's LNG Plant Is Bad; The Math Behind The Global LNG Fleet Is Far Worse

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by Tyler Durden
Thursday, Mar 19, 2026 - 11:10 AM

One week ago, when global oil and gas prices were well below where they are today, we warned that the global energy situation was "dire" as "Half Of Available Global LNG Tankers Are Trapped In The Persian Gulf." The math was stark: at least 20 LNG carriers or about half the available global fleet, were trapped in the Persian Gulf, with daily freight costs soaring as demand from Asia surges and yet no matter the charter rate, there simply was no way to cross the blockaded Strait of Hormuz.

“The situation is dire and will have a lasting impact on the market, regardless of how quickly the conflict ends,” Kostas Karathanos, the chief operating officer of Athens-based Gaslog, which operates 34 gas carriers, told The Wall Street Journal.

As a reminder, some 20% of global LNG exports come from Gulf countries. At the moment, however, only the occasional Chinese/Indian ship can get through the Strait of Hormuz, preferably with a navy escrot.

But while that was bad, it got far worse today when suddenly the global energy market had not only a transit chokepoint to worry about but also a sudden attack crippling much of the world's LNG supply: an Israeli air strike hit Iranian gas infrastructure and petrochemical facilities at Iran's South Pars natural gas field - the world's largest gas field shared with Qatar.

The Israeli motive behind the strike was clear: natural gas accounts for 79% of Iran's total generation of power, which is an input into oil production too. The motive behind Iran's scorched-earth retaliation was also clear: the regime said that energy sites in Saudi Arabia (Samref refinery and Jubail petrochemical complex), Qatar (petrochemical plants and a refinery), and the UAE (Al Hasan Gas Field) are now targets, and sure enough just hours later, the world was shocked with clips of massive explosions rocking all of these upstream gas facilities.

Qatar reported that its Ras Laffan industrial city, home to the LNG plant that accounted for about a fifth of global supply before production was halted earlier this month due to a forced shut in as a result of available LNG tankers to load current production, was hit by an Iranian missile after four others were intercepted, authorities said late Wednesday. Hours later, Abu Dhabi shut its Habshan gas facilities after they were hit by falling debris from an intercepted strike.

A subsequent attack on Ras Laffan early on Thursday led to a fire, which Qatari authorities said they were dealing with. QatarEnergy said in a statement that several of its LNG facilities were hit, causing sizable fires and extensive further damage. No casualties were reported. The US would retaliate if Qatar’s LNG facilities were attacked again, President Donald Trump said in a post on Truth Social.

"If there is damage to the LNG plant, this is obviously more consequential, particularly given the limited inventories or stocks of LNG,” said Neil Beveridge, managing director of research at Bernstein. “There is no strategic reserve for LNG.”

“A retaliatory attack on Ras Laffan is exactly what the global natural gas market feared the most,” said Tom Marzec-Manser, Europe gas and LNG director at consultancy Wood Mackenzie Ltd. “We’re yet to know which part of the industrial complex has been damaged, but either way it’s going to be bullish for gas prices when the market opens on Thursday.”

“The willingness of Iran to attack Qatari infrastructure is a major escalation,” said Richard Pratt, a consultant at Precision LNG Consulting LLC. “Uncertainty over the impact will roil markets for sure.”

Other regional producers were also attacked: the Abu Dhabi Media Office said in a post on X that no injuries were reported at Habshan. Abu Dhabi National Oil Co. operates one of the world’s largest onshore gas processing facilities there, with 14 trains able to produce more than 6 billion cubic feet of gas a day, enough to supply South Korea.

The Saudi Defense Ministry also said the country had thwarted a drone attack targeting a gas facility in its eastern region. In a separate incident, shrapnel from a ballistic missile fell near a south Riyadh refinery.

In a note later in the day (available to pro subs), Goldman agreed, writing that the developments underscore "upside risks to the bank's price forecast" from longer Hormuz disruptions and from persistent damage to energy production even after Hormuz reopening.

Still, thanks to local expediency it is likely that the damage will be fixed relatively soon barring any further Iranian attacks on Qatar infrastructure. 

  • *QATAR SAYS IT HAS CONTAINED ALL FIRES IN RAS LAFFAN

That, however, does not remove the bigger issue facing local LNG production: the ongoing blockade of the Straits which led to the abovementioned production shut-ins at Qatar's LNG plants and elsewhere, and the lack of available LNG tankers to restore normal production as without freely available storage where to deposit new product, local facilities have no choice but to remain shut. 

As a reminder, Ras Laffan Industrial City covers 295 square kilometers in area (114 square miles), about one-third the size of New York City. As well as LNG processing, it’s also home to other gas-related facilities, including a gas-to-liquids plant, LNG storage, and condensate splitters, as well as an oil refinery.

The site was effectively cut off from the rest of the world by the throttling of tanker traffic through the Strait of Hormuz following US and Israeli attacks on Iran. Production was halted earlier this month after an Iranian drone attack, leading QatarEnergy to declare force majeure on deliveries, throwing the global LNG market into turmoil and sending buyers scrambling for alternative supplies

Which prompts us to take a closer look at the fleet of LNG tankers currently stranded in the Gulf, which as we discussed last week, accounts for roughly half the entire available global fleet. 

What is notable, is that until today's attack by Israel, there was a vague sense of normalcy being restored: using back channels, India had negotiated with the Iranian regime to let several of its stranded LNG tankers go through the Straits, even if it meant them being escorted by Indian Navy ships.

This development prompted JPMorgan to ask (full note here) if such an arrangement could materially ease the disruption to LNG supply via the Strait?The bank's short answer: no. That's because of the 17 LNG vessels currently in the Persian Gulf, only two are owned by Chinese companies; at least one is not loaded, and both are insured in the UK.

As JPMorgan notes, while some tankers might be allowed to exit the Strait and deliver cargoes to end markets, this would not materially change the situation as long as Qatar’s liquefaction facilities remain shut, which has nothing to do .

Meanwhile, based on Bloomberg ship‑tracking and Wood Mackenzie fleet data, there are no Indian‑owned or Indian‑flagged LNG tankers in the global fleet of about 800 LNG vessels; there are only three Chinese‑flagged LNG carriers and 32 vessels with owners headquartered in China, and Chinese‑owned LNG vessels account for about 3–4% of the global LNG fleet.

Some more math: the voyage from Qatar to Shanghai takes about 14 days of sailing each way—so a single delivery takes around one month end‑to‑end: 1 day to load, 14 days sailing, 1 day to discharge, and 14 days to return for the next loading. 

China imports about 80 LNG cargoes per month, on average. Of the 80 cargoes, Qatar‑origin volumes average about 20 cargoes per month, which the Chinese LNG fleet could potentially accommodate.

However, Qatari-origin cargoes to China have historically been delivered primarily by Qatari-owned vessels while the Chinese fleet mainly operates in the Pacific basin, importing Australian and other Pacific volumes. Despite strong export footprints, countries like Australia, Malaysia, Indonesia, Papua New Guinea, and Brunei have not developed large LNG shipping capabilities, so China relies on its own ships for imports; redirecting these vessels to Qatar would complicate import logistics from the Pacific basin, all of which take weeks to streamline: weeks the global market which suddenly finds itself with 20% less supply does not have. And to reiterate perhaps the most important point: unlike oil, there is no strategic LNG reserve, anywhere.

And the punchline: even if the above were circumvented and China succeeded in optimizing its fleet to prioritize Qatar cargoes, JPMorgan thinks it’s unlikely Qatar would restart LNG production to serve such limited volumes amid uncertainty about the medium‑term feasibility of this arrangement. And that's assuming the damage from today's Iranian attack can be fixed quickly.

That leaves only two possible outcomes: either the 10-15 cargoes already loaded in the Gulf that could potentially receive exemptions to sail through the Strait, or the straits reopen. Everything else leads to a catastrophic outcome and LNG prices that soar around the global until the dreaded "demand destruction" - i.e., prices drop not due to higher supply but lower demand, usually a precursor to recession - kicks in.

More in the JPMorgan and Goldman notes available to pro subscribers.

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