Governments across MENA are looking for energy alternatives the disruption bites

The worst energy market disruption in history is now hitting the real economy — and governments across our region are scrambling to contain the fallout. The International Energy Agency (IEA) is already calling this the largest disruption in oil market history. For countries already struggling with big import bills — hello, Morocco and Egypt — that means inflation and a hit to industrial output. Qatar’s coffers, meanwhile, could suffer up to USD 20 bn in annual losses from a 17% loss in LNG export capacity.

Governments dependent on energy imports are pushing policies to soften the blow for consumers, with Morocco announcing a subsidy for the transportation sector and Egypt taking its first step toward energy rationing.

Morocco turns to its crisis playbook: Morocco is rolling out a portal that allows transportation players to apply for subsidies rather than adopting direct consumer subsidies. It’s the third time in six years that Rabat deployed a similar program to prevent a hike in freight and public transit rates. By subsidizing everything from city taxis and rural transit to freight trucks and tourism fleets, the state is betting that the subsidies can prevent inflation’s domino effect from reaching consumer goods prices.

While the portal is now live, the real test is the speed of delivery. If cash doesn’t hit bank accounts as fast as price hikes hit the pumps, the cushion the government is promising may prove too thin to stop a spike in the cost of living.

Egypt leans on austerity: A new round of austerity measures will come into effect starting Saturday, 28 March, as the government attempts to contain a ballooning energy bill without triggering a new wave of inflation. The measures include earlier closing hours for stores and restaurants, reduced public lighting, a shutdown of government buildings in the new capital after work hours, and a temporary slowdown in diesel-intensive projects.

The rationale: Instead of passing through higher global energy costs to consumers, it is effectively shifting the adjustment onto operating hours, public consumption, and business activity. That helps shield households in the short term but places immediate pressure on sectors like retail, hospitality, and entertainment that rely heavily on evening demand. The impact on employment could be grim if the measures stay in place for any length of time.

Where the disruption is coming from

Where things stand: Saudi Aramco has cut crude oil supply to Asian buyers for April. Iraq cut down over 70% of its oil production in Basra, and Kuwait slashed its own by more than half. Meanwhile, Qatar has lost some 17% of its production for up to five years.

Compounding the uncertainty, Iran is saying the oil from which the US has lifted sanctionsdoes not exist. (US Treasury Secretary Scott Bessent had said last week that the US would temporarily lift sanctions to allow the sale of 140 mn barrels of Iranian oil stranded at sea as part of Washington’s bid to tamp-down oil prices.)

Without a swift resolution to the conflict, reserves risk becoming little more than a stopgap — even if the plan to release hundreds of mns of barrels could be executed in less than six months (which it can’t).

Grim outlook for natural gas

The global natural gas supply chains are even more exposed than oil, with feweralternative routes, lower storage capacity, and facilities that are more expensive and complex to repair.

Long-lasting damage: Repairs to Qatar’s LNG facilities after this month’s missile strikes could take up to five years, Mees reports. Two liquefaction trains — roughly 12.8 mtpa, or 17% of Qatar’s LNG capacity — have been knocked offline, forcing QatarEnergy to declare force majeure on long-term contracts with buyers in Europe and Asia, QatarEnergy’s CEO Saad Al Kaabi told Reuters.

This comes as lost volumes from Hormuz’s shipping halt mount — with each month of disruption removing around 1.5% from annual global LNG availability, intensifying competition for a shrinking pool of flexible supply.

The search for alternatives — and their limits

West Africa is the fastest external option, but it only solves part of the problem. Nigeria has lifted output to about 1.7 mn bbl / d and is pitching itself as a diversification partner. Nigerian and Angolan grades could also see stronger East-of-Suez demand as buyers hunt for light sweet alternatives.

But there’s the catch: “West Africa is short on spare capacity,” Ruaraidh Montgomery, head of energy trends and analysis at Welligence Energy, tells EnterpriseAM.

Brazil is one of the few non-Opec producers big enough to matter — but not enough to cover a global energy shock. Output is forecast to average 4 mn bbl / d in 2026. The catch: Brazilian barrels take longer to reach Asia, and cargo offers into China have already jumped to USD 13-14 above Brent, showing that replacement supply exists but gets expensive once Asian buyers start chasing it.

And the crude isn’t a perfect match: Much of it is lighter than the medium-sour Gulf grades many refiners are built for. On top of that, Brazil’s growth is already baked into market expectations — meaning it doesn’t offer a fresh pool of emergency barrels, Montgomery added

This is where Moscow comes in: Russia is emerging as the market’s most usable emergency fallback for Asia, with its medium-sour grades and already flowing barrels that can be redirected faster than new supply can be developed.