Qatar halted production of liquefied natural gas on Monday as Iran continued striking Gulf countries in retaliation for Israeli and US attacks, prompting precautionary shutdowns of oil and gas facilities across the Middle East.

As the wave of drone attacks in the region continues, the following impacts have been noted:

  • Saudi Arabia, long considered the Gulf's unshakeable shock absorber, faces forced output cuts within a week.
  • Qatar's entire capacity for liquefied natural gas of million tonnes per annum (Mtpa) sits offline after a drone strike on Ras Laffan.
  • In the Mediterranean Sea, Israel's Leviathan gas field has been shuttered, cutting off Egypt's primary gas supply.
  • Saudi Arabia’s Ras Tanura refinery is on fire, Fujairah in the UAE is disrupted, and commercial shipping through the strait has ground to a near-halt.

Rystad Energy’s analysis looks at the implications of these latest attacks on the Middle East, assessing who falls first, how far and how fast.

The Strait of Hormuz’ closure and alternative routes

The Strait of Hormuz normally sees transit of 16 million barrels of Gulf crude oil per day, excluding volumes from Iran.

With storage buffers measured in days rather than months, and alternative export infrastructure covering only a fraction of total volumes, the question for most Gulf producers is not whether they will have to curtail production, but when; Iran will be the first to halt output.

The country exports some 3.5 million bpd, of which 3.2 million bpd is entirely Hormuz-dependent.

A partial relief valve exists in the form of the pipeline from Kirkuk in the country’s northern Kurdistan region, which can move up to 0.5 million bpd northward to Ceyhan on Turkiye’s Mediterranean coast – but this pipe is currently stopped, offering no immediate reprieve.

With storage in Basra already running thin, Iraq has suspended output at key fields including Rumaila South, West Qurna, and West Qurna 2, exceeding 1.5 million bpd in total.

With a storage runway of just 2–3 days, the remaining operational fields face an imminent near-certain shutdown.

Saudi Arabia’s buffer is also running thin.

The country exports around 7 million bpd, with an operational bypass in the form of the East-West pipeline from Abqaiq to the Red Sea port of Yanbu.

This line has a rated capacity of 5 million bpd, which can be expanded to 7 million bpd by converting natural gas liquid lines to crude service.

Even after full bypass utilization, 3-4 million bpd of Saudi exports remain exposed to the closure.

The key constraint is not the pipeline itself but Yanbu's loading infrastructure, which limits practical throughput to well below the pipeline's nameplate capacity.

Once operational storage at current drawdown rates is factored in, the effective runway before forced output cuts is only 7–9 days.

Yanbu has been loading at 2.5-3.0 million bpd on average since the start of March, using the pool of VLCCs and Aframax oil tankers already in proximity to the port.

While the terminal demonstrated a peak load rate of 4.8 million bpd, this reflects a one-off spike driven by the concentration of large vessels available in the first days of the crisis.

It is not clear if this can be sustained over a prolonged period.

With four VLCCs currently ready for loading, the best-case scenario for the next three days is to maintain the current average, with no meaningful upside.

Additional cargoes are en route to Yanbu, but the majority will not arrive until the weekend, meaning the window that matters most for storage drawdown will pass before reinforcements arrive.

With upside on loading rates very limited in the near term, we expect Saudi Arabia to begin shutting in production by early next week at the latest, should no alternative marketing options materialize.

The UAE has partial cover but is still exposed.

The Abu Dhabi Crude Oil Pipeline (ADCOP) provides a genuine operating alternative, moving 1.8 million bpd to the Fujairah terminal on the Gulf of Oman, bypassing Hormuz entirely.

With total exports of roughly 3.3 million bpd, this covers just over half of normal outflows – which still leaves 1.5 million bpd, or around 45% of the UAE’s exports, dependent on passage through Hormuz.

The Fujairah storage provides Abu Dhabi-based operator ADNOC with a buffer to hold output for a couple of weeks, after which some curtailments are likely to appear.

Kuwait faces the same predicament, but with no bypass at all as the country has no alternative pipeline options or coast from which to ship its 1.5 million bpd of exports.

With a storage runway of 10–14 days, Kuwait has slightly more time than Iraq, but with no options to bypass the Strait of Hormuz, output cuts are unavoidable once that buffer is exhausted.

Iraq: first to bite the dust

Iraq has already announced suspension of production from some of its major oil fields due to limited storage capacity and no export options.

With inventories rising rapidly, Iraq has already halted production at Rumaila South (0.7 million bpd), West Qurna 2 (0.4 million bpd) and Maysan (0.32 million bpd), leading to around 1.5 million bpd of lost production.

A few more days of constrained exports will lead to shutdown of other major fields in Basra, including Rumaila North, Zubair and Halfaya (Figure 4a).

Iraq last month produced around 4.15 million bpd of crude, in line with its OPEC quota.

Output from the Kurdistan region has been stable in the recent past at around 250,000 bpd, following the resumption of exports via the Kirkuk–Ceyhan pipeline.

Iraq’s domestic consumption has been around 0.75 million bpd, leaving 3.4 million bpd available for exports.

With the country’s storage capacity of 30 million barrels, a halt to exports could force it to curtail production by as much as 3 million bpd.

Kurdistan progress hampered again

Production from the Kurdish region of Iraq has been turbulent over the past three years, keeping the region from taking full advantage of its output capacity.

Production averaged around 260,000 bpd in the fourth quarter last year after pipeline exports to Ceyhan resumed in September, with 50,000 bpd consumed locally and the rest exported.

Kurdish production was expected to jump by more than 20% this year to above 300,000 bpd, driven by additional drilling planned by DNO in Peshkabir and higher output from Gulfkeystone and HKN-operated assets.

However, the current events have instead prompted these operators to shut down production, resulting in a halt in pipeline exports to Ceyhan.

More than 180,000 bpd of production is expected to have gone offline, with the remaining output being used domestically.

Qatar’s production halt

QatarEnergy halted LNG production following a drone strike on its gas facilities in Ras Laffan on 2 March.

The indefinite stoppage affects Qatar’s entire liquefaction capacity of 77 million tonnes per annum (Mtpa).

Rystad Energy expects a 4.3% or 3.3 Mt decline in annual 2026 production.

While the conflict certainly clouds Qatar’s medium-term outlook, the LNG powerhouse is set to nearly double its capacity to 142 Mtpa within the next decade by adding 64 Mtpa across three expansion phases, NFE (32 Mtpa), NFS (16 Mtpa) and NFW (16 Mtpa).

NFE's first train is expected online in the third quarter this year, barring infrastructure damage or continued shipping difficulties.

NFS targets first gas in late 2028 or early 2029, while the NFW reached a final investment decision (FID) only days ago.

With Qatari LNG output halted, a loss of supply compared to expectations has become a certainty.

The amount of reduced volume depends on damage to the facility, which is still being assessed, and how long the strait will remain closed to maritime traffic.

In case of little to no infrastructure damage and a prompt end to hostilities, resulting in a 15-day production halt, Rystad Energy expects a 4.3% or 3.3 Mt decline in annual 2026 output.

An extended disruption would see 5.6 Mt lost. A full-scale disruption – consistent with the US announcement of four to five weeks of military conflict – followed by clearing the strait for commercial traffic would result in a loss of 11.2 Mt for the full year 2026.

Leviathan’s temporarily halt of gas

In Israel, the Leviathan project, with 2025 production of 10.6 billion cubic meters (Bcm) per annum, and the Karish project have both been temporarily halted as a precautionary measure.

The suspension has halted gas exports to Egypt, which imported 6.4 Bcm of Leviathan gas last year.

This has resulted in a ramp-up of LNG contracts for Egypt as the country is boosting its LNG imports by leasing five shipments with a total volume of 2 billion cubic feet per day to compensate for the shortfall.