Markets ablaze as Middle East conflict continues

Renewed fighting in the Middle East has sent gas markets reeling. US strikes on Iranian targets, Houthi advances on the Bab el-Mandeb strait, and the shutdown of Saudi Arabia’s East-West pipeline have all contributed to Brent crude surpassing $100 per barrel, while LNG prices surge toward $30 per MMBtu, closing the gap between European and Asian buyers.

The supply impact is substantial and escalating. Rystad Energy now predicts conflict-related LNG production losses from Qatar of 64.8 Mtpa in 2026 and 22.9 Mtpa in 2027, a stark rise from their previous estimates. In response, they have increased their 2026 price forecasts for TTF and Northeast Asian spot LNG to $16.0 and $17.0 per MMBtu, respectively, as Europe's low storage levels and winter arbitrage uncertainty keep buyers on edge.

Looking ahead, the longer-term outlook is more positive. Supply and demand are expected to realign by 2028, with the market tipped into oversupply by 2029, peaking at 81 Mtpa in 2032. For both buyers and producers, the challenge lies in navigating the current market tightness, which is rapidly easing.