FT: Middle East tensions could disrupt global gas, but 2022-level crisis unlikely

A potential disruption to global gas supply driven by escalating tensions in the Middle East is unlikely to trigger a crisis as severe as Europe’s 2022 shock, thanks to improved infrastructure, new supply, and fuel-switching options, the Financial Times (FT) reports.

In 2022–2023, Europe lost around 120 billion cubic metres (bcm) of Russian gas, sending prices soaring more than tenfold to above €300 per megawatt hour. A similar-scale disruption is now conceivable if conflict involving Iran damages production and export capacity. At the upper limit, losses could reach 120 bcm annually—equivalent to a complete halt of LNG exports from Qatar and the UAE, alongside reduced flows from Iran and Israel.

However, such a worst-case scenario remains unlikely. While damage to Qatari facilities could keep roughly 18 bcm offline for years, the Strait of Hormuz is expected to reopen gradually, allowing exports to resume at reduced levels rather than stopping entirely.

Crucially, the global gas market is entering this crisis from a stronger position. Prior to the conflict, concerns centred on oversupply, not scarcity. According to the International Energy Agency, new LNG capacity—primarily from the United States—could add up to 40 bcm in 2026, offsetting a significant portion of potential losses.

Fuel switching provides an additional buffer, though it is more constrained than in 2022 due to simultaneous disruptions in oil markets and gas condensates. Even so, Asia could replace up to 19 bcm of gas demand with coal, while Europe—by reactivating coal plants in countries like Germany and Italy—could save nearly 10 bcm annually.

Despite these mitigating factors, risks remain. Prolonged disruptions or delays in new LNG projects could tighten supply, disproportionately affecting poorer, import-dependent countries. Some demand reductions are also likely in the Middle East itself, particularly in gas-intensive petrochemical industries. Globally, manufacturers reliant on gas—such as chemical and fertiliser producers—may lose competitiveness to US firms benefiting from cheap shale gas.

Even in such scenarios, European gas prices are not expected to revisit the extreme levels of 2022, when limited import infrastructure and weak interconnections amplified the shock. Those structural vulnerabilities have largely been addressed, making the current crisis serious but far more manageable.

By Jeyhun Aghazada