Qatar LNG production suspension affects global supply, Morgan Stanley: natural gas surplus may be

# Dong Jing

Source: Wallstreetcn

Morgan Stanley has warned that this shutdown will eliminate most of the expected supply surplus in 2026. If the shutdown lasts more than one month, the market will shift into a shortage, and LNG prices could climb above $30 per million British thermal units. Meanwhile, the bank has delayed its forecast for the first cargoes from Qatar’s North Field expansion project to the first quarter of 2027, cutting an additional approximately 1 million tons from this year’s supply forecast.

Qatar’s liquefied natural gas (LNG) facilities were forced to shut down following drone attacks. This incident, one of the most significant unplanned supply disruptions in history, is reshaping the structure of the global natural gas market. Morgan Stanley warned that the shutdown will wipe out most of the previously forecast 2026 supply surplus, and if the outage extends beyond one month, the market will quickly move into a supply deficit.

On March 9, Bloomberg reported that analysts including Devin McDermott at Morgan Stanley stated in a March 8 research note that if the timeline for Qatar to restore production remains unclear in about a week, LNG prices could quickly rise to $30 per million British thermal units or higher.

Qatar’s energy minister has told the Financial Times that the restart and delivery resumption of Ras Laffan, the world’s largest LNG plant, could take weeks or even months.

The Qatar LNG shutdown has triggered severe market volatility. As noted in a Wallstreetcn article, European natural gas prices surged more than 60% in two trading days, the sharpest price swing since the 2022 energy crisis. Options markets also reflect high alert, with implied volatility of European benchmark futures rising to its highest level since the summer of 2023, indicating a broadly bullish sentiment.

## Unprecedented shutdown scale overturns supply surplus forecasts

Before the outbreak of the Iran conflict, Morgan Stanley had projected that the global LNG market of around 420 million tons per year would face a supply surplus of up to 6 million tons in 2026 as new projects in the U.S. and elsewhere came online. However, the shutdown has largely invalidated these forecasts.

Morgan Stanley also pushed back its forecast for the first shipments from Qatar’s North Field expansion project to Q1 2027, reducing this year’s supply projection by a further approximately 1 million tons.

Export facilities operated by QatarEnergy account for about one-fifth of global LNG supply. The company stated in a recent announcement that it halted LNG production at Ras Laffan after a drone struck a water tank at a power plant within the facility and the Ras Laffan energy complex.

Yet the complexity of the supply disruption goes beyond physical damage to the facilities. The widening conflict in the Middle East has effectively closed the Strait of Hormuz since last weekend — the main shipping lane for Qatar’s LNG exports — making the supply recovery timeline even more uncertain.

According to Bloomberg, following last week’s unprecedented shutdown, the Ras Laffan plant appears largely intact, but restarting operations and resuming deliveries will still take considerable time.

## Asian buyers rush to secure supplies first; European restocking pressure surges

As most Qatari LNG flows to Asia, the supply cutoff has triggered a buying spree in the Asia-Pacific region. South Korea has moved early to seek alternative supplies to secure critical fuel for power generation, and some buyers have requested early delivery of LNG cargoes to cover current shortfalls, according to Wallstreetcn.

Ross Wyeno, head of short-term LNG analysis at S&P Global Commodity Insights, said:

“The market will see significant price volatility in the coming days as participants assess the impact of lost production on their respective supply portfolios. Asia-Pacific buyers will likely be the most active in recent spot purchases.”

Analysts including Samantha Dart at Goldman Sachs also noted that, since most Qatari LNG heads to Asia, Asian spot prices are expected to rise more sharply relative to Europe.

Notably, the shutdown’s impact on Europe extends beyond prices, directly undermining the economic case for summer restocking. With the end of winter in Europe and gas inventories heavily depleted, there are serious concerns about whether the upcoming summer refill season can be completed smoothly.

European summer natural gas contracts have risen sharply above subsequent winter contracts, eroding the appeal of storage arbitrage trades and complicating the restocking outlook.

Huibert Vigeveno, CEO of Switzerland-based MET Group, said:

“Supply security concerns could once again become a severe challenge for Europe.”

---

## Risk Warning and Disclaimer

The market involves risks, and investment decisions require caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Any investment made based on this article is at your own risk.