A stress test that gas is failing: The regional disruptions may be hitting oil and gas at the same time, but the fallout is diverging fast — one can reroute, while the other can’t. Oil is bending around the shock, while gas is absorbing it — with little room to maneuver.

Oil has optionality, gas has constraints: Crude can shift across pipelines, tankers, and storage with relative ease, while gas is structurally less forgiving — fewer routes, tighter logistics, and thinner buffers. The global LNG system depends on fixed liquefaction, shipping, and regasification capacity, with limited room to improvise when flows are hit. And unlike oil, gas markets lack any comparable strategic reserve or quick supply response to stabilize conditions.

Gas moves through two channels — pipelines or supercooled cargoes — and both come with limitations. Pipeline trade is the simplest and cheapest, but only works between connected neighbors with fixed infrastructure, while cargoes move gas in superchilled LNG — a process that depends on expensive liquefaction plants on the export side and regasification import terminals on the receiving end.

Limited pipes, limited options

Our region’s gas network runs through a handful of fixed corridors — Qatar’s Dolphin pipeline into the UAE and Oman; Iranian exports feeding Iraq and linking to Turkey; and the Arab Gas Pipeline connecting Egypt to Jordan and the Levant. nt. Rather than a unified network, the region’s gas trade consists of fragmented, bilateral systems shaped by political and commercial ties.

It also ultimately comes down to response time: LNG export terminals are capital-intensive, technically complex, and slow to repair once damaged or shut. Oil refineries and export systems, by comparison, are faster to restart — evident in refinery turnarounds.

The asymmetry is in the fleet: War risk premiums and higher tanker rates are rising for both oil and gas, but LNG carriers face a more constrained market, with fewer vessels and less rerouting flexibility. The global oil tanker fleet numbers some 12k vessels, compared to roughly 700-800 LNG carriers.

Markets are already pricing that gap: European and Asian gas benchmarks have outpaced crude since the conflict began, signaling a longer recovery curve. Earlier this month, in the first reactions to the disruptions, Brent futures rose 8%, while the TTF was trading up by 19%. Oil prices rose by some 40% since January, with natural gas contracts up by around 80%.

Spot demand is a source of tension, with Europe and Asia bidding against each other for the same flexible cargoes, sending prices soaring. Import-dependent buyers without long-term cover will feel it first, and as demand rises, sellers will face a simple calculation — honor a lower-priced long-term contract or pay the penalty and capture a fatter margin in the spot market.

The loss of volume to the energy market creates an imbalance of supply and demand, specifically for Asian consumers, founder of JHT consulting and former VP and Managing Director for Black & Veatch Javid Talib tells EnterpriseAM.

The market demand will get tempered, since there is no immediate replacement for the lost volume coming online, Talib tells us, noting that the supply side of the market will be rebalancing their available short term/spot volume distribution to take advantage of higher LNG pricing.

Timing made things worse

Gas walked into the shock already stretched: Global gas demand has been growing faster than oil over the past decade — demand for oil rose by 0.8% in 2024 compared to 2.7% for natural gas — driven by rising power demand. LNG demand alone is expected to rise from 422 mn tons in 2025 to some 650-710 mn tons by 2040 — a 54-68% rise — with Asia driving around 70% of that growth, according to Shell.

The LNG market has limited short-term swing supply. New liquefaction projects in the US and elsewhere are ramping up, but they cannot instantly offset a large Gulf disruption. New projects usually take four to five years from final investment decision to completion.

Storage is where gas loses the game outright

From a logistics standpoint, oil can be stored almost anywhere — in tanks on land or tankers at sea, which can double as floating storage when needed. Gas is far less flexible: it has to be compressed, and even in liquid form, storage depends on specialized vessels and infrastructure, which limits storage locations and pushes costs higher.

That constraint kills flexibility just when you need it most: Oil traders can build buffers and release them when flows tighten. On the other hand, gas markets operate closer to the edge — disruptions hit consumption faster because there’s less stored volume to smooth the shock.

Seasonality adds another layer of fragility: Gas demand swings sharply — rising in winter in Europe and in summer in the Middle East, with weaker demand in the shoulder seasons — making storage timing harder and riskier. Oil demand is flatter, giving storage operators more predictable turnover.

This mismatch makes gas harder to hedge and stabilize: Oil markets can cycle inventory throughout the year, providing flexibility, while gas storage depends heavily on seasonal timing. When disruption hits off-cycle, the system has fewer shock absorbers.

Gulf oil finds a way — gas has no exit

Oil is already adapting — pipelines and rerouting are kicking in. Major Middle East producers such as Saudi Arabia and the UAE are shifting flows to ports outside Hormuz — Yanbu via the East-West pipeline and Fujairah via the Habshan-Fujairah pipeline — moving even as maritime risks rise. It’s not seamless, but it works.

Gas doesn’t have that escape valve: There’s no pipeline workaround at scale for lost LNG volumes, and disruptions to Qatari exports ripple straight through the global supply chain.

What’s next?

Even a ceasefire wouldn’t reset gas quickly: LNG infrastructure takes years to repair — QatarEnergy’s CEO estimated repairs to damaged LNG capacity will take three to five years — and buyers that start diversifying away don’t snap back quickly.

The result: Some markets, especially cost-sensitive ones, will rethink how much gas they want in their energy mix — countries across Asia are already ramping up coal-fired generation. The industry that was scaling up demand may now find that demand doesn’t come back. However, “diversification away from gas is going to take decades,” Talib said.

This is a wakeup call to the importers of LNG, Talib told us, noting that the geopolitical risks in the Arabian Gulf strengthen the strategic value of sourcing LNG from elsewhere like the US, Canada, and Argentina.

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