The recent LNG supply disruption from Qatar poses significant challenges for India, which relies heavily on these imports. This article explores the unfolding situation.
How it unfolded
In recent weeks, a series of attacks attributed to Iran have severely impacted Qatar’s LNG supply capabilities, a critical source for countries like India. Qatar is responsible for approximately 40% of India’s LNG imports, making the situation particularly alarming for the Indian government and its energy security. The attacks have caused significant damage to Qatar’s Ras Laffan LNG hub, sidelining 17% of its LNG capacity for an estimated 3 to 5 years, according to QatarEnergy CEO Saad al-Kaabi.
As the situation escalated, the Strait of Hormuz, a vital maritime route for oil and gas shipments, became nearly impassable due to the ongoing Iranian assaults. This disruption not only affects LNG but also poses a risk to 90% of India’s LPG imports, which transit through this critical waterway. The ramifications of these attacks extend beyond immediate supply issues, as they threaten to destabilize energy prices globally.
Following the news of the LNG outage, European gas prices surged by 35%, reflecting the heightened anxiety in the energy markets. Brent crude prices also saw a brief spike of more than 10%, surpassing $119 per barrel. Such fluctuations underscore the interconnectedness of global energy markets and the potential for regional conflicts to have far-reaching consequences.
In response to these challenges, India is actively seeking alternative sources for LNG and LPG to mitigate the impact of the supply disruptions. Officials have indicated that they are attempting to procure cargoes from other suppliers, as noted by Sujata Sharma, who emphasized the urgency of diversifying sources. However, the ongoing instability in the region complicates these efforts.
India’s vulnerability is further highlighted by its heavy reliance on imports for its energy needs, with 85% to 90% of its oil sourced from abroad. The top five import sources for crude petroleum include Russia, Iraq, Saudi Arabia, the UAE, and the USA, which collectively account for around 83% of India’s crude imports in fiscal 2025. This dependency makes the country particularly susceptible to disruptions in the Middle East.
As the situation develops, officials like Randhir Jaiswal have called for restraint, urging that civilian infrastructure, including energy facilities, should not be targeted in conflicts. The ongoing turmoil raises questions about the future stability of energy supplies and prices, with analysts warning that if the disruption through Hormuz persists, Indian buyers may have to resort to procuring higher-priced spot cargoes or even reducing consumption, as noted by Sumit Ritolia.
Currently, India is witnessing a 36% increase in domestic LPG production from refineries, a move aimed at bolstering its energy security amidst these challenges. However, the long-term outlook remains uncertain as the repairs to Ras Laffan are projected to take several years, leaving a multi-year supply loss in the LNG market. The unfolding events serve as a stark reminder of the fragility of global energy supply chains and the need for countries to adapt to an increasingly volatile geopolitical landscape.
