Gulf Producers Face Pressure from Buyers over Prices and Supply Guarantees

The recent US-Iran war has reshaped the global energy industry, weakening the reputation of Gulf producers as reliable suppliers. As a result, Asian and European buyers of liquefied natural gas (LNG) are planning to push for lower prices and additional supply guarantees from Qatar and the United Arab Emirates.

Qatar's vast reserves have made it the dominant force in the global gas market, accounting for roughly one-fifth of global LNG export capacity. The country's low production costs have allowed Qatari LNG to rank among the most competitively priced supplies. However, the war has forced QatarEnergy to shut liquefaction trains and declare force majeure on deliveries, making it more expensive for buyers to secure insurance.

Long-term LNG contracts from Qatar and the UAE typically priced at 12.6% to 12.7% of the Brent crude price before the war began. However, some deals signed since have closed closer to 12.3%, suggesting buyers were already factoring in higher regional risk.