Middle East war impact: Indian buyers of liquefied natural gas are currently looking at alternative sourcing strategies to make up for disrupted supplies from Qatar, after the Gulf producer halted output in the wake of an Iranian drone strike. The unexpected suspension of operations at Qatar’s LNG export facility, the largest of its kind globally, signals a sharp escalation in regional tensions and has reignited worries over global energy security. As the world’s second-biggest LNG exporter, any prolonged disruption from Qatar could heighten competition for available supplies worldwide.Qatar remains India’s largest LNG supplier – it accounts for nearly half of the country’s imports last year, based on vessel-tracking information compiled by Bloomberg.
Petronet LNG Ltd. and GAIL (India) Limited, both of which hold long-term contracts for Qatari LNG, are considering issuing spot tenders to secure additional cargoes, according to people familiar with the developments. The sources added that the government has indicated it could explore procurement through bilateral government-to-government arrangements.
LNG supply disruptions
On Monday, Oil Minister Hardeep Singh Puri convened a meeting with the heads of state-run oil and gas firms. In a post on X, the ministry said that “steps will be taken in order to ensure availability and affordability of major petroleum products in the country.”Reports suggest that the government has also proposed prioritising household consumption in the event of shortages, potentially rationing gas supplies to industry and refineries if required.Meanwhile, the charter rates for LNG tankers have more than doubled as an immediate impact of the US-Israel-Iran war. Owners and intermediaries in the shipping market are now seeking daily charter rates of over $200,000 for liquefied natural gas carriers operating in the Atlantic Basin, according to Bloomberg report. This figure is roughly twice the level being quoted less than 24 hours earlier.The sharp jump in freight costs came after Qatar halted LNG output as tensions with Iran began spreading across the broader region. The quoted rates are at least three times higher than the most recent benchmark assessment by Spark Commodities, which had valued LNG tanker hire at $61,500 earlier on Monday.However, Richard Pratt, a consultant at Precision LNG Consulting LLC, indicated that actual charter agreements are unlikely to spike dramatically unless production outages in key hubs such as Qatar and Abu Dhabi persist. He added that the longer sailing distance for vessels traveling from the US to Asian markets could further influence freight pricing.
Indian firms reduce gas supply to industries
Indian firms on Tuesday curtailed natural gas allocations to industrial consumers amid expectations of supply constraints from the Middle East, following a production shutdown by leading exporter Qatar, according to a Reuters report.Qatar suspended liquefied natural gas output on Monday as Iran persisted with strikes on Gulf nations in response to attacks by Israel and the United States. The escalation has also disrupted oil and gas cargo movements through the Strait of Hormuz, pushing up international energy prices and freight charges.
