Oil Supply Shock Ripples Through Fertilizer, Plastics, and Tech

By Tsvetana Paraskova - Apr 06, 2026

The worst supply shock in the history of the oil market is spilling over to critical supply chains, threatening shortages of medical supplies, fertilizers, semiconductors, and everyday consumer goods, including textiles, footwear, and cosmetics.

When the Strait of Hormuz is shut, it’s not only Asian refiners scrambling for crude oil to turn into fuels.

The naphtha, ammonia, urea, and helium supply that the Middle East would typically export via the most critical energy chokepoint is now trapped in the Persian Gulf. Petrochemicals producers in Asia, which are key exporters of plastics and other derivatives to the global markets, are cutting production and operations, declaring force majeure left and right. Without plastics, adhesives, lubricants, solvents, and even materials to make plastic caps and packaging for basic consumer goods, what began as an oil supply disruption is turning into a crisis along the supply chains of key industries, which will hit consumers with higher prices and/or shortages soon.

The most immediate disruption is seen in Asia. But Asia is a major exporter of all these goods and processed petroleum derivatives, which means shortages and higher prices are spilling over to other regions, too.

“Much like during COVID, the shock unfolds sequentially rather than simultaneously – a rolling supply disruption moving westward,” J.P. Morgan said in a note last week, as carried by CNN.

Asia’s petrochemicals industry is already feeling the crunch. Across Asia, shortages of naphtha and other key petrochemicals feedstocks due to the Iran war have already forced petrochemicals firms to curb output.

Asia’s petrochemicals sector is highly dependent on naphtha, liquefied petroleum gas (LPG), and methanol from the Persian Gulf, so the war in the Middle East is creating a major supply shock in Asia, which is the most vulnerable to supply disruptions from the Gulf region, trade credit insurance group Coface said last month.  

“With 60 to 70% of Asian naphtha passing through Hormuz, a prolonged disruption could redefine flows, costs and, perhaps, the very geography of the global petrochemical industry,” said Joe Douaihy, sector economist, Coface. 

Commodity intelligence firm ICIS noted in the second week of the war that “Asia’s petrochemical dominance sits atop a feedstock system that is dangerously concentrated. A single geopolitical shock can reverberate across an entire industrial continent.”

We are now in the sixth week of the war, the Strait of Hormuz is still de facto closed, and supply chains are reeling from the shock of slashed crude, naphtha, LNG, LPG, fertilizer, ammonia, urea, and helium supply.

Asia feels it first, but concerns and shortages spread to the West, too.

U.S. farmers plan to plant less corn, wheat, and rice acreage, as fertilizer prices have surged following the supply shock in the Middle East.

“The interruption of crop-nutrient supplies from the Gulf comes just as planting season begins in the Northern Hemisphere, threatening yields and harvests through the year and pushing food prices higher,” the International Monetary Fund (IMF) said last week.

Shortages of helium, of which Qatar produces a third of the global supply, are reverberating through the tech industry. Chip makers are scrambling for supply, with Qatar’s production sites hit by missiles and what’s already produced unable to leave the Strait of Hormuz. Helium is vital for the manufacturing of semiconductors and medical imaging devices.

Medical supplies are also threatened, and not only in Asia. The UK could face days until some supplies run out, the chief executive of NHS England, Sir Jim Mackey, told LBC radio last week.

The IMF last week warned that “The war is also reshaping supply chains for non-energy and critical inputs.”

The closure of the Strait of Hormuz, the mother of all disruptions, is affecting not only fuel supply and fuel prices globally. It has hit the processing and manufacturing of materials critical for food production, medicine, technology, and consumer goods, exposing the world’s dependence on petroleum derivatives for a normal everyday life.

By Tsvetana Paraskova for Oilprice.com

Qatar LNG Tankers Make First Move Through Hormuz Since War Began

By Tsvetana Paraskova - Apr 06, 2026

Two tankers that loaded LNG from Qatar before the war began appear to be attempting to exit the Strait of Hormuz in what could be the first export of Qatari LNG in over a month.

The Al Daayen and the Rasheeda, which took Qatari LNG at the end of February just before the war started, have idled in the Persian Gulf for a month as Iran effectively closed the Strait of Hormuz to vessel traffic after the U.S. and Israel began bombing it on February 28.

Now the two LNG carriers loaded with Qatari gas are moving east toward the opening of the Strait of Hormuz near Oman, Bloomberg reported on Monday, citing vessel-tracking data.

The Al Daayen signals its destination is China, according to data in MarineTraffic. The Rasheeda signals ‘for orders’, but both destinations could change and it’s unclear whether and when the tankers would be able to transit the Strait of Hormuz.

If they succeed, though, these would be the first loaded LNG tankers that have exited the Strait of Hormuz since February 28.

The de facto closure of the Strait of Hormuz has trapped about 20% of daily global LNG flows. In addition, Iranian drone and missile strikes on energy infrastructure in the region has damaged Qatar’s key LNG liquefaction complex Ras Laffan.

Qatar’s state firm QatarEnergy expects the damage to the Ras Laffan LNG complex, the world’s single largest LNG-producing facility, to cost it about $20 billion per year in lost revenue and to take up to five years to repair.

QatarEnergy has been forced to declare force majeure for up to five years on some long-term LNG contracts.

The LNG crunch has sent Asian and European gas prices to the highest levels in three years and stoked fears about rebuilding gas inventories in Europe ahead of the next winter.

By Tsvetana Paraskova for Oilprice.com

Nearly 50 Qatar LNG Tankers Sit Idle Across Asia

By Irina Slav - Apr 06, 2026

Almost 50 liquefied natural gas carriers used by Qatar to export the superchilled fuel are idled in Asia, Bloomberg has reported, citing data from Kpler. All the vessels are empty, the data shows.

The LNG carriers are accumulated in a handful of locations, including West India, Sri Lanka, close to the Strait of Malacca between Indonesia and Malaysia, and offshore Singapore.

LNG carriers typically have a capacity of 170,000 cu m of natural gas, which translates into 72,000 tons of liquefied gas. The Bloomberg report references “more than four dozen” vessels being idled across Asia, meaning a loss of at least 3.456 million tons of LNG in carrier capacity.

Bloomberg notes that globally, there are about 800 LNG carriers in operation. This number is considered insufficient for projected LNG demand, analysts warned before the latest Middle Eastern war. With Qatar’s LNG production suspended as a result of the war, tanker supply should be a less major issue.

Amid the disruption in global LNG trade, China has been reselling record amounts of liquefied gas to other Asian countries, taking advantage of its solid stockpiles and lukewarm demand. In March alone, China resold up to 10 cargoes of LNG—a record-high for any month ever, according to data from energy analytics firms Vortexa, Kpler, and ICIS, as cited by Reuters last week.

Yet the events in the Middle East have started to sap demand for liquefied gas across Asia, as supply tightness pushes prices higher, helped by competition from Europe. Imports of liquefied natural gas into Asian countries fell last month by the sharpest rate since 2020, when pandemic lockdowns decimated energy demand. The total for the month stood at 20.6 million tons, according to Bloomberg, which represented an annual drop of 8.6%. It was the sharpest demand drop since December 2020.

By Irina Slav for Oilprice.com

QatarEnergy’s U.S. LNG Plant Achieves First Production at Critical Time

Golden Pass achieved its first production and is preparing for the start of exports (Golden Pass LNG)

Published Apr 1, 2026 8:04 PM by The Maritime Executive

Just as the world is looking for alternative sources of LNG, Golden Pass LNG in Texas reported it has achieved first production. The project, which has been in planning and development for 15 years, is set to start export shipments in the second quarter, coming online to help fill some of the shortfall from Qatar and the Middle East.

The United States is already setting records for LNG shipments and has been rivaling Qatar for the title of the largest producer/exporter. The U.S. Energy Information Administration reported the U.S. was the largest export country in 2025 with over 100 million tons of LNG, further establishing its position after strong exports in 2024. LSGE reports that the U.S. set another new all-time high in March, exporting 11.7 million metric tons, versus the previous record of 11.5 million tons just four months ago. 

Global supply fell by as much as 20 percent in March as hostilities with Iran grew. QatarEnergy reported that it had suspended its operations at Ras Laffan after it was struck by the Iranians, and it warned that its operations could be reduced by as much as 12 million metric tons per year for up to five years while it completes repairs. Qatar had expected to pull ahead in the global race as it commissioned its new North Field.

Golden Pass had been in the application and permitting phase from 2012 to 2017. It is a joint venture with Qatar owning 70 percent and ExxonMobil holding the other 30 percent. The two companies made their final investment decision in February 2019, reporting they would invest approximately $10 billion for the development of Golden Pass LNG.

 

Cool down cargo arrived in December 2025 (Golden Pass)

 

“Golden Pass LNG is part of a wider QatarEnergy strategy for international investments that we have been planning over the past decade,” said Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs, and the President and CEO of QatarEnergy. “It also represents a significant part of the plans announced by QatarEnergy in 2018 to invest 20 billion dollars in the U.S. energy sector.”

The project had received its cool down cargo in early December aboard one of QatarEnergy’s new LNG carriers. The company is taking delivery on a massive new fleet with its shipping partners after what was billed as the largest shipping building project. The ships are being built in both South Korea and China.

“First LNG is of particular importance for one of the largest single investment decisions in U.S. LNG history,” commented the minister. “The operational phase and market entry of Golden Pass LNG will come at an important time when global energy security ranks very high on energy agendas worldwide.”

The project is located 10 miles south of Port Arthur, Texas, and close to the Louisiana border. The project highlights that it has a unique advantage in its location with a large, deep-water port. EIA notes it has been just 10 years since the U.S. launched Sabine Pass as an LNG export hub.

The first of three trains at the new site is now in production at the Sabine Pass Terminal. The company said it is now focusing on the delivery of its first cargo, achieving sustained liquefaction operations, and moving to meet its commercial and strategic objectives.

When the project is completed, the three trains will have a total capacity of 18.1 million tons per year. It also includes five 155,000 m³ LNG storage tanks and two marine berths. It will be able to accommodate the largest LNG carriers in the world and become one of North America’s largest LNG export terminals.

Gulf Energy Strikes Risk Catastrophic Environmental Disaster – Analysis


An Iranian missile hit Haifa oil refineries in Haifa Bay, 19 March 2026. 

Photo Credit: Hanay, Wikipedia Commons

April 5, 2026 
 Arab News
By Gabriele Malvisi

When Iraqi forces withdrew from Kuwait in 1991, they left more than 700 oil wells burning in their wake. The fires took eight months to extinguish, spewing smoke plumes that stretched some 800 miles and spilling 11 million barrels of crude into the Gulf.

It was one of the largest man-made environmental disasters on record. More than three decades on, the current US-Israeli war with Iran, which has seen oil infrastructure bombed across the region, has ignited fears of a comparable catastrophe.

“The 1991 Gulf War oil fires, while concentrated in Kuwait, were on a far greater scale than what we are seeing presently,” said Doug Weir, director of the Conflict and Environment Observatory, a UK-based nonprofit.

“However, such comparisons will seem academic to those communities living in proximity to the targeted sites and who may face acute and chronic exposure to pollutants as a result.”

Attacks on energy infrastructure have escalated dramatically since the conflict began, disrupting global supply chains. Strikes on Saudi, Kuwaiti and Qatari liquefied natural gas facilities, combined with a near-total blockade of the Strait of Hormuz, have caused widespread outages.

Brent crude — which peaked at $119.50 on March 8 — climbed back to $116 on Monday, reflecting markets that remain deeply volatile.

Several energy companies have declared force majeure, prompting the Philippines to declare a national energy emergency and countries including Slovenia and Sri Lanka to introduce fuel rationing.

However, on April 2, the Philippines said Iran has granted its ships toll-free, safe, unhindered and expeditious passage through the Strait of Hormuz.

US President Donald Trump has threatened to “obliterate” Iran’s Kharg Island oil hub if an ongoing diplomatic process — mediated by Pakistan — fails to produce a deal. The threat came a day after he told London’s Financial Times that he was considering “taking the oil” in Iran.

Despite a declared pause in strikes on civilian infrastructure, Iran’s Ministry of Energy reported that attacks had cut power across Tehran and surrounding provinces. And on April 4, the US claimed responsibility for bombing Iran’s newly built B1 suspension bridge between Tehran and Karaj.

On Monday, fires broke out at an Israeli oil refinery in Haifa after a fuel tanker was struck by debris from an intercepted missile.

The economic consequences are already spreading far beyond the region. According to Oxford Economics, the conflict will upend energy markets for the rest of the year.

Higher prices and uncertainty will squeeze household spending, falling hardest on countries most dependent on Gulf oil and gas.

The fear is that, as a direct consequence of price hikes, the most vulnerable populations will be forced to consume less — and in some severe cases skip meals — underlining that the impact of disruption is not equally felt.

But the economic toll is only part of the story. Analysts warn that acute and long-term environmental risks resulting from the bombing remain largely underreported.

“It is pivotal to keep tracking and monitoring these strikes to make a proper risk assessment for nearby communities,” Wim Zwijnenburg, project leader on humanitarian disarmament at Dutch civil society organization PAX, told Arab News.

“In our current mapping, we are assessing over 2,500 damaged locations, some of them involved in missile production or other industrial processes that use large volumes of hazardous substances.

“Attacks on those locations can result in acute exposure to toxic materials, or long-term damage from pollutants getting into the soil and water sources.”


PAX has documented at least 18 attacks on commercial vessels over the course of four weeks of conflict, resulting in at least four oil spills, and the bombing of several naval vessels near Bandar Abbas on Iran’s Hormuz Strait, close to internationally recognized protected areas.

Many of Iran’s military bases are located within protected nature areas, Zwijnenburg noted, making them both ecologically sensitive and militarily vulnerable.

During the 12-day US-Israeli war with Iran in June last year, vast areas of vegetation in five protected sites caught fire following strikes on Iranian missile bases.

Oil pollution entering Gulf waters adds another dimension. Pollutants do not just damage the ecosystem; they enter the food chain through bioaccumulation and biomagnification, with cumulative health effects for the millions of people who rely on Gulf seafood.

The risk was thrown into sharp relief on Monday, when Iran reportedly struck a fully loaded Kuwaiti crude oil tanker in Dubai waters, sparking a fire. Authorities later confirmed the incident was contained with no spill or injuries.

“So far, the spills we are witnessing have been fairly small, and the oil dilutes or evaporates fairly quickly,” said Zwijnenburg, adding that dozens of spills and the dumping of wastewater from tankers and cargo vessels in the Arabian Gulf during peacetime pose “a larger problem” and contribute to “sustained pollution.

“But with these attacks, it only takes one large, fully laden crude oil tanker to be hit and create an ecological disaster, and those chances are rising each day.”

Earlier in March, researchers from Queen Mary University of London, Lancaster University and the Climate and Community Institute estimated that the first 14 days of the Iran war generated more than 5 million tonnes of carbon dioxide equivalent — greater than Iceland’s total annual carbon output.

The largest sources were the destruction of infrastructure and the burning of oil.

Among the conflict’s most haunting images is the black rain that fell near Tehran in mid-March — an oily, acidic downpour formed when soot, ash and toxic chemicals from burning fuel depots merged with atmospheric moisture and fell back to earth.

Although the phenomenon has been documented in other conflict zones — most notably following the Kuwait oil fires of 1991 — its appearance over a capital city of 10 million people marks a grim episode.

Iran’s Deputy Health Minister Ali Jafarian warned that soil and water supplies around the capital were already showing signs of contamination.

Authorities urged residents to stay indoors as the rain — likely laced with benzene, acetone, toluene and methylene chloride, all known carcinogens — coated streets and buildings across the city.

“In the short term, civilians face acute respiratory illness and worsening of pre-existing health issues due to heavy smoke and airborne pollutants,” said Mohammed Mahmoud, head of Middle East climate and water policy with the UN University Institute of Water, Environment and Health and founder of the Climate and Water Initiative.


“Over time, continued exposure to these contaminants can translate into higher risks of chronic respiratory disease, cardiovascular illness, and cancer that often emerge many years after initial exposure.”

These risks are “especially severe” for children and pregnant women, he said, with early-life toxic exposure carrying risks of long-term developmental impairment.

The region’s desalination plants, which provide the vast majority of drinking water in Kuwait, Oman and Saudi Arabia, represent a further vulnerability. Iran said a US airstrike damaged one of its plants. Bahrain accused Iran of damaging one of its own.

Massive oil spills in the Gulf could force desalination plants, which convert seawater into freshwater, to suspend work to avoid contamination or damage to machinery.

“Damage to desalination infrastructure is an immediate and critical threat,” said Mahmoud, who warned that in a region “heavily dependent” on desalinated water, any disruption can lead to limited access to safe drinking water, affecting all local populations.

While international humanitarian law prohibits methods of warfare expected to cause “widespread, long-term and severe damage” to the natural environment, enforcement is poor.

Iran’s foreign minister has accused Israel of committing ecocide, but as Weir noted, “at present, there is no international crime of ecocide, and none of the conflict parties have it on their domestic statute books. Accountability remains a political rather than a legal question.”

After the war ends, environmental damage — and its human toll — risks becoming a low priority.

“Too little attention is being focused on what needs to come next in terms of environmental assessment, assistance and remediation,” said Weir.

“We have seen little to suggest that Iran will have the resources, support or governance structures necessary to support an effective environmental response.”

Satellite imagery confirms extensive damage at Qatar’s Ras Laffan LNG plant

Satellite imagery confirms extensive damage at Qatar’s Ras Laffan LNG plant / bne IntelliNewsFacebook

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By Ben Aris in Berlin March 29, 2026

Satellite imagery indicates significant damage at Qatar’s Ras Laffan LNG plant that was hit by Iranian missiles on March 18, including the apparent collapse of primary heat exchangers at Train 6 and structural damage to adjacent facilities, according to open-source analysis.

The extent of. The damage has raised concerns the time table for effecting repairs might be increased from the preliminary estimate of one year to closer to fire years if critical equipment has been destroyed. That would have the short-term effect of pushing up gas prices and long-term effect of leaving the US as the predominant supplier of LNG to the international market.

The extent of the damage has prompted expectations of a fresh force majeure declaration, with QatarEnergy’s chief executive now saying that repairs could take between three and five years, contingent on an immediate halt to hostilities. The disruption could result in an estimated $20bn in lost revenue annually.

The attack took two of the facility's 14 trains offline but it has been unclear just how much damage was done. The key component in an LNG plant is the brazed aluminium heat exchanger known as a BAHX (brazed aluminium plate-fin heat exchanger) that cools gas to close to absolute zero. One of the most complicated pieces of machinery in the world, only five firms worldwide can make them and already have a backlog of orders. If Ras Laffan has to order new ones from makers, delivery could take up to five years.

Train 6 forms part of Qatar’s liquefied natural gas infrastructure at Ras Laffan, the world’s largest LNG export facility. The reported damage is estimated to have removed approximately 17% of the country’s LNG export capacity from the market.

Major importers, including Italy, Belgium, South Korea and China, are expected to be affected by any sustained outage. The scale of the disruption has raised concerns among market participants about tightening global gas supplies, particularly as demand remains elevated in both Europe and Asia.

One market participant described the situation as “as close as you get to an Armageddon scenario for global gas markets”. Another comment circulating online attributed to Russian President Vladimir Putin, saying “it’s a shame Europe no longer has Nord Stream”.

Iranian strikes on Gulf aluminium plants raise supply concerns

Two key aluminium producers in the UAE and Bahrain were hit by Iranian missile strikes doing significant damage. / bne IntelliNewsFacebook

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By Ben Aris in Berlin March 29, 2026

Two major aluminium production facilities in the Middle East were hit by Iranian strikes on March 28, raising concerns over global supply as disruption in the region intensifies.

Emirates Global Aluminium (EGA), one of the world’s largest producers, sustained “significant damage”, while Aluminium Bahrain (Alba) said it is “assessing the extent of the damage” following a separate strike on its operations.

The Iranian Revolutionary Guard Corps (IRGC) claimed the sites targeted were linked to the United States military, in a statement carried by Iran’s state broadcaster IRIB. The strikes were retaliation for a US-Israeli attack on Iranian industrial infrastructure launched from military bases hosting US forces in the Gulf states, the IRGC said.

EGA said on March 28 its Al Taweelah site sustained significant damage during Iranian missile and drone attacks at Khalifa Economic Zone Abu Dhabi, with assessments ongoing. The company said a number of employees were injured, but added that none of the injuries were life-threatening.

The biggest non-energy industrial company in the UAE, the Al Taweelah smelter produced 1.6mn tonnes of cast metal in 2025. The company added it had "substantial metal stock on the water when the conflict began, and stock on the ground in some overseas locations." EGA operates two smelters, one each in the emirates of Dubai and Abu Dhabi.

Alba said in a statement that two employees were injured in the attack on its facility.  

The Middle East accounts for approximately 9% of global aluminium supply, making it a critical source for international markets. Analysts warn that disruption to production and exports could tighten supply chains already under pressure from logistical constraints in the Gulf.

Emirates Global Aluminium, jointly owned by Abu Dhabi’s sovereign wealth fund Mubadala and the Investment Corporation of Dubai, is a major supplier to international markets, including the US. The UAE is the second-largest aluminium exporter to the US after Canada.

The company is also involved in plans to develop what has been described as the first new aluminium smelter in the US in decades, a project in Oklahoma backed by state-level incentives and aimed at strengthening domestic supply.

Damage to facilities in both the UAE and Bahrain could therefore have implications beyond the region, particularly for US manufacturers reliant on imported aluminium.

There has been no independent verification of the extent of the damage, and neither company has provided detailed operational updates.

“Emirates Global Aluminium sustained ‘significant damage’,” according to the report, while Alba said it is “assessing the extent of the damage”.

Iran Claims Aluminum Plant Attacks In Bahrain, UAE

Iran launches a missile. Photo Credit: Tasnim News Agency

March 30, 2026 
By Arab News


Iran’s Revolutionary Guards said Sunday they launched missile and drone strikes on aluminum plants in Bahrain and the UAE over the weekend, targeting what they described as industries linked to the US military.

The Guards also threatened to target US universities in the Middle East, while saying US-Israeli strikes had destroyed two Iranian universities. They demanded a US condemnation of the bombing of universities by noon (0830 GMT) Monday.

Since the Middle East war erupted at the end of February, Bahrain and other Gulf countries have regularly been targeted by Iranian missile and drone strikes in retaliation for the US-Israeli campaign, now in its second month.

In a statement carried by Iranian state broadcaster IRIB, the Guards said they hit an aluminum facility in the UAE and Aluminium Bahrain’s main plant, calling both sites “industries affiliated with and connected to the US military and aerospace sectors in the region.”

The IRGC said the strikes were retaliation for a US-Israeli attack on Iranian industrial infrastructure launched from bases in Gulf states.

Aluminium Bahrain, one of the world’s largest aluminum producers, said two employees were wounded in an Iranian strike targeting its facility on Saturday.

The company, also known as Alba, said the workers suffered minor injuries.

Alba added that it was assessing the impact on operations and would provide updates when available. It gave no details on damage to the site.

Emirates Global Aluminium confirmed on Saturday that the company’s Al-Taweelah site sustained significant damage during the Iranian missile and drone attacks at Khalifa Economic Zone Abu Dhabi.

A number of EGA employees were injured. None of the injuries were life threatening.

Abdulnasser Bin Kalban, chief executive of EGA, said: “The safety and security of our people is our top priority at EGA at all times. We are deeply saddened and are assessing the damage to our facilities.”

EGA’s Al-Taweelah smelter produced 1.6 million tonnes of cast metal in 2025. EGA had substantial metal stock on the water when the conflict began, and stock on the ground in some overseas locations.

Gulf states intercept Iranian missile and drone attacks

Defense forces in the UAE and Kuwait said early Sunday they were actively responding to new waves of hostile missile and drone attacks launched from Iran, as the conflict triggered by a joint US-Israeli assault on Tehran entered its second month with no sign of abating.

The defense ministries of both states posted on X to reassure citizens that the explosions they were hearing were the result of air defense systems intercepting incoming fire.

“Everyone is requested to adhere to the security and safety instructions issued by the competent authorities,” Kuwait’s Army General Staff said in a separate statement, as four Iranian drones were intercepted and destroyed.

Air defenses engaged 16 ballistic missiles and 42 drones on Sunday, the UAE defense ministry said.

In Saudi Arabia, the defense ministry reported Sunday morning the interception and destruction of 10 drones during the past hours.

Bahrain’s Defense Force reported it has engaged a total of 385 drones and 174 missiles since February 28.

 

The Iran War Has Already Unleashed a $25 Billion Energy Repair Bill

By Rystad Energy - Mar 26, 2026

• Rystad estimates energy repair and restoration costs have already reached at least $25 billion.
• 
  
• Qatar’s Ras Laffan stands out as the most serious case, with LNG recovery potentially taking up to five years.
• 
  
• Recovery across the Gulf will depend not just on money, but on equipment bottlenecks, contractor availability and sanctions.
• 
  

War in the Middle East has triggered severe global supply disruptions in oil and gas, with reported damage and shutdowns affecting liquefied natural gas (LNG) trains, refineries, fuel terminals and critical gas-to-liquids facilities across the region. According to Rystad Energy’s estimates, energy infrastructure repair and restoration costs to date could reach at least $25 billion, based on an initial assessment of impacted facilities, and are expected to rise further. Spending is likely to be driven primarily by engineering and construction, followed by equipment and materials.

In assessing repair costs and full restoration timelines across severity tiers, one clear outlier emerges in Qatar’s Ras Laffan Industrial City, where the destruction of LNG trains S4 and S6 has triggered force majeure and a 17% capacity reduction, equivalent to about 12.8 million tonnes per annum (Mtpa). However, capital alone will not be sufficient to restore the facility, with a full recovery taking up to five years. This is because the large-frame gas turbines required to power LNG main refrigeration compressors are supplied by only three original equipment manufacturers (OEM) globally, all of which entered 2026 with production backlogs of around two to four years, driven by demand from data center electrification and coal plant retirements.

The Gulf region’s recovery will be defined less by financial capital and more by structural constraints. While some assets may be restored within months, others could remain offline for years. Beyond the status of the Strait of Hormuz, every day of damaged or shut-in infrastructure pushes pre-war production capacity further out of reach. Iran’s South Pars offshore field and Qatar’s Ras Laffan facility stand out as particularly concerning cases. The scale of damage and long lead times for critical equipment could result in slow recovery at Ras Laffan, while Iran’s legal exclusion from Western supply chains means it will have to rely on Chinese and domestic contractors, which is a technically feasible approach that could be slower and more expensive. Urgent repairs will have to take precedence in place of planned expansion,

Audun Martinsen, Head of Supply Chain Research at Rystad Energy

Looking beyond Qatar, neighboring Bahrain represents another distinct disruption scenario. The BAPCO Sitra Refinery was struck twice, causing confirmed damage to two crude distillation units (CDU) and a tank farm, with force majeure declared across group operations. Here, the constraint is not equipment shortages or sanctions, but the timing of the damage relative to the asset’s investment cycle. The facility had just reached mechanical completion under its $7 billion modernization program in December last year, with engineering, procurement and construction (EPC) contractors still onsite finalizing ramp-up obligations when the attacks occurred. The destruction of a newly commissioned CDU block just months after first production has eliminated novel processing capacity, delaying the revenue intended to support the recent investment. Restoring the units will likely require international contractors to be re-mobilized at conflict-inflated costs and under uncertain war-risk insurance, as the damaged assets had only recently come online.

There were also moderate-to-minor disruptions in other countries, including the UAE, Kuwait, Iraq and Saudi Arabia. Across all impacted facilities, the factor that most consistently shapes recovery trajectories is the density and proximity of the domestic EPC ecosystem surrounding each asset – an often-underestimated variable in conventional damage assessments. Saudi Aramco’s rapid restart at Ras Tanura, where maintenance teams were already onsite for a planned turnaround when debris fell inside the perimeter, provides the clearest example of the advantages enabled by deep domestic capability.

The speed of recovery in the region will depend on execution capacity and capital deployment timing, as repair spending ramps up. Operators are likely to prioritize restoring existing fields instead of new developments, creating demand for EPC contractors and OEMs, especially those with regional experience and existing agreements with national oil companies. Near-term work will most likely focus on inspection, engineering and site preparation, followed by equipment replacement and construction as procurement constraints ease. In Iran, continued sanctions would limit access to Western contractors and technology, leaving domestic and East Asian players to capture most recovery-related activity.

By Rystad Energy

 YOU CAN'T TRUST UNCLE SAM

U.S. Security Guarantees Under Scrutiny in Gulf States

By James Durso - Mar 26, 2026

• U.S./Israeli attacks on Iran triggered Iranian retaliation that disrupted ports, airports, energy infrastructure, and trade, revealing the limits of American security guarantees.
• 
  
• Gulf states may renegotiate U.S. defense arrangements, pursue strategic autonomy with diverse military suppliers and domestic defense industries, and strengthen regional institutions like the GCC.
• 
  
• To safeguard economies and influence, Gulf nations could diversify investments, expand trade/delivery routes, cautiously engage Iran, and leverage sovereign wealth funds to pressure the U.S. and other partners.

The Arab states of the Persian Gulf have suffered major economic and security costs in the wake of the U.S./Israeli attack on Iran. Iranian missile and drone retaliation hit airports, ports, and energy infrastructure, disrupting aviation, trade, tourism, and hydrocarbon exports, and damaging the Gulf’s reputation as a stable business hub.

Attacks on shipping and energy facilities, such as the disruption at Fujairah port and the Shah gas field in the United Arab Emirates (UAE), show how quickly a U.S./Israel war on Iran can spill over onto Gulf territory. Or “What happens in Iran doesn’t stay in Iran.”

UAE businessman Khalaf Ahmad al-Habtoor, a former business partner of U.S. president Donald Trump, publicly castigated Trump, “You have placed the countries of the Gulf Cooperation Council [GCC] and the Arab countries at the heart of a danger they did not choose…Who gave you permission to turn our region into a battlefield?” If Habtoor represents elite thinking in the Gulf, and local sources confirm he does, Gulf countries will reduce their future exposure to the U.S. They might:

Demand a new security framework with the U.S

Washington’s security guarantees did not adequately protect them from Iran’s retaliation, and they now see American security cooperation as an “acute vulnerability” according to Badr Albusaidi, the foreign minister of Oman. The New York Times reports the Gulf countries are looking elsewhere for solutions to countering Iran’s attack drones: “Saudi Arabia reached out to Ukraine, a nation with experience fending off Russian drones modeled on Iranian ones. The United Arab Emirates got help from France and Australia. And several Gulf governments asked Italy to provide anti-drone and anti-aircraft systems.

Despite the grand-sounding relationships: Saudi Arabia, Qatar, Kuwait, and Bahrain are “major non-NATO allies,” and the UAE is a “major defense partner,” the U.S. lacks resupply capability for its alleged friends or will ensure available weapons flow to Israel first.

Trump’s admission “we were shocked” that Iran struck at U.S. allies, and that he went to war with Iran "out of habit," shows he is not serious and makes the case for the internal critics of exclusive ties to the U.S.

Possible steps are to renegotiate defense arrangements with Washington (with clear commitments to defend Gulf territory) including the status of forces agreements (SOFA); demand consultation mechanisms, such as “dual-key” requirements for major military operations; seek burden-sharing agreements, including compensation for infrastructure damage or interceptor costs (Qatar invested USD1.8 billion to upgrade Al Udeid Air Base for the Americans); pushing for integrated regional air and missile defense systems; and, shelving  Trump’s signature project, the Abraham Accords.

This could resemble a formal Gulf–U.S. security compact rather than the current informal arrangement, but the U.S. will resist the compact if Israel opposes it.

Pursue strategic autonomy.

If the war accelerates a shift away from total reliance on the U.S., the Gulf countries may: expand military procurement from multiple suppliers (Europe, South Korea, possibly China), though the U.S. will oppose this and will block any local attempt to make foreign systems interoperable with U.S. weapons; invest more in domestic defense industries, such as Saudi Arabian Military Industries or EDGE (UAE)  especially in air defense, drones, and cyber; strengthening joint GCC military command structures.

Strategic autonomy would reduce the risk of being dragged into conflicts initiated by external actors.

Rebuild relations with Iran.

Even if tensions remain, Gulf states have a strong incentive to prevent another war and engage with Iran in a “cold peace” as they are “neighbors forever,” though Saudi duplicity – privately urging Trump to attack Iran while publicly pledging Saudi territory would not be used to attack Iran – will make rebuilding confidence a lengthy process. And if the Gulf states enter active combat against Iran, other than fending off drones and missiles, Iran may attack the most critical infrastructure, such as water desalination plants. And there is always the possibility of Trump suddenly declaring victory, pulling out, and leaving the locals exposed to Iran’s wrath.

The Saudis may be tempted to activate the defense pact with Pakistan, but the Pakistan armed forces are busy fighting the Taliban, who have pledged to help Iran if it was attacked by the U.S. Pakistan probably won’t commit to fight Iran unless the Saudis take the lead which would in turn hazard Saudi desalination plants (Saudi Arabia is 70% reliant on desalinated water). And Iran allowed a Pakistani commercial oil tanker to pass through the Strait of Hormuz, so Islamabad must also consider future forbearance by Tehran, or potential alternate suppliers,  before it decides to fight.

 Possible responses are: limiting U.S. warship visits and military unit deployments; opening direct diplomatic channels with Tehran; establishing maritime deconfliction mechanisms in the Strait of Hormuz, through which roughly one-fifth of global oil trade passes; multinational (GCC, Iraq, Iran) coast guard units to ensure maritime safety; non-aggression or “non-interference” understandings; economic cooperation where possible (trade, transport, electricity grids); and resolving territorial disputes, i.e., Greater Tunb, Lesser Tunb, and Abu Musa (Iran, UAE) or the Arash/Durra gas field (Kuwait, Saudi Arabia, Iran)

Strengthen regional institutions.

The war highlights the need for stronger Gulf coordination and reforms could include revitalizing the Gulf Cooperation Council as a real security bloc; joint missile defense and intelligence sharing; and coordinated maritime security patrols, giving the region a collective voice in crises rather than reacting individually.

Reduce economic vulnerability.

Because the Gulf economies depend on stability and global trade, war has exposed major risks.

Remedies are: Accelerate economic diversification programs such as Saudi Vision 2030; expand overland and pipeline routes that bypass the Strait of Hormuz; and invest more in logistics hubs outside the conflict zone (Red Sea, Gulf of Oman, Arabian Sea) to reduce the ability of any single conflict to disrupt Gulf economies.

According to Sanam Vakil, “These developments carry particular significance at a moment when Gulf governments are attempting to transform their economic models.” Moving the economy from a rentier hydrocarbon model to finance, tourism, technology, and logistics presupposes the surety of the hydrocarbon assets that will fund the transformation, and the presence of the expatriate workers needed to make the whole thing work.

The biggest loser in the Gulf from the conflict may be Iraq, which declared force majeure on foreign-operated oilfields. Nearly all of Iraq’s oil exports, about 3.3 million barrels per day, flow through the Strait of Hormuz (second only to Saudi Arabia,), and about 90% of total government revenue is from oil exports. Wood Mackenzie estimates Iraq is losing USD3.3 billion daily based on a 70% decline in Petroleum output, and Iraq’s GDP could shrink by 3.5% this year.

The cash crunch comes when Trump is pressing Iraq to nominate a prime minister of his liking, and Iran-backed militias are attacking American forces in the country.

Iraq is also suffering power cuts in advance of the peak season as it lost access to natural gas after the U.S./Israel attack on Iran’s South Pars gas field.

Use diplomatic leverage.

The Gulf states have significant potential leverage as their sovereign wealth funds invest hundreds of billions of dollars globally and they control a large share of global energy exports. After the war, they may use investment policy to influence U.S. and European decisions; deepen ties with China, Turkey, and India as balancing partners; and promote a regional security dialogue that includes Iran, Iraq, and the GCC.

This may be where the Gulf states can pressure the U.S. According to Forbes, “The six Gulf countries’ eleven sovereign wealth funds (SWF) invest about USD2 trillion in the U.S, which is over 35% of their total assets under management.” The Gulf states also hold about USD307 billion in U.S. Treasuries…Disinvesting from SWF commitments may expose them to losses if the U.S. economy sags due to the Iran War, but if they stopped rolling over maturing Treasuries, yields would rise, meaning higher borrowing costs for the U.S.

The Gulf states can put their USD2 trillion investment commitments to Trump “under review” and they have a perfect excuse: We have to repair the war damage and restock out magazines. This will undercut Trump’s claims that he is rebuilding American industry and creating jobs.

In fact, the Financial Times reports, “A number of Gulf countries have begun an internal review to determine whether force majeure clauses can be invoked in current contracts,” and “the prospect of an investment review by the wealthy states had caught the White House’s attention.”

A “regretful” invocation of force majeure would suit the style of the Gulf: avoiding a noisy break with the U.S. but communicating displeasure in the only language Trump understands, dollars and cents.

The GCC states are a center of Trump family business activity, such as from real estate and golf to crypto and tech?adjacent ventures. Once Trump leaves the office, it may be time to renegotiate some of those deals, as Trump’s successor, even if a Republican, may not be interested in making the effort to protect the Trump family fortune.

Summary

After the war, Gulf countries may pursue a three-part strategy:

1. Renegotiate security relations with the United States.
2. Reduce dependence on external powers through strategic autonomy.
3. Build regional diplomacy—including cautious engagement with Iran—to prevent another war.

By James Durso for Oilprice.com