The ongoing geopolitical situation has reshaped global energy flows and security calculations. Previously, Gulf producers formed the core of the global oil and gas trade, collectively supplying nearly a third of seaborne petroleum and close to a fifth of LNG. Saudi Arabia, the UAE, Kuwait, and Iraq exported 23-25% of crude and refined products primarily through the Strait of Hormuz, while Qatar shipped 110 bcm of LNG annually to Asia, Europe, and increasingly Africa. This system relied on secure routes with few backups.
Today, that balance is upended. The Strait of Hormuz, which typically handles around 15 – 20% of the global oil and gas supply now sees minimal flows, posing the risk of the largest energy supply disruption in modern history. Gulf output cuts total 8–10 mbd amid full storage and weak bypass routes. Attacks on refineries, export terminals and LNG trains have disrupted refineries at Ruwais and Ras Tanura (3–4 mbd offline) and Qatar’s Ras Laffan (17% global LNG) and sectors such as fertilisers and petrochemicals. The combined effect has flipped markets from surplus to shortage in just weeks. This has sparked price swings, factory shutdowns, and stalled exports, as H.E. Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, and Managing Director and Group CEO of ADNOC, warns – risking major shocks not just to the region but the global economy.
“These past weeks have reminded us of the fundamentals: stability in energy markets underpins stability in every market. Energy security is not just a slogan. It’s the difference between lights on and lights off. And it rests on a simple truth: the world’s critical arteries must remain open. The Strait of Hormuz is one of those arteries,” Dr Al Jaber told attendees at the CERAWeek.
New oil market dynamics
For Gulf NOCs, this disruption breaks sharply from the pre-conflict era of reliable exports and steady growth. Producers such as ADNOC, Saudi Aramco, and QatarEnergy had leveraged stable market access to expand refining and LNG capacity and anchored the region’s role in global supply for Asia, Europe and Africa.
The new situation brings uncertainty, with restarts taking 3 to 12 months or even years for key assets including ADNOC’s 922,000 b/d Ruwais refinery complex, Saudi Aramco’s Ras Tanura, and Qatar’s LNG facilities. The immediate focus has shifted from growth to asset protection and supply-chain stabilisation, which includes costlier rerouting, storage logistics, insurance exposure, and new terminals. Yet Gulf NOCs such as ADNOC show strong resiliency to rebound quickly once infrastructure is secured from prolonged attacks.
Non-OPEC + production growth from US shale (+0.8 mb/d), Brazil and Guyana offers only limited relief. Demand remains strong short-term, driven by 2.5% annual growth in petrochemicals and aviation (with air travel recovery outpacing EVs at 15% of fleet by 2030), limiting deeper price drops.
Brent trades USD 80–100/bbl amid 200 million barrels of stranded cargoes and stock draws. The IEA projects that, once restarts gradually materialise, the short-term imbalance could ease to a modest 1 mb/d oversupply by late 2026. Yet market power appears to be shifting, and for ADNOC and its regional peers, the priority is now less about stabilising prices and more about redefining their role in an increasingly fragmented global energy system.
New natural gas and LNG market dynamics
The global gas market faces tightening as disruptions from Qatar’s Ras Laffan (about 17% of global LNG capacity) trigger force majeure declarations and delay new Gulf expansion projects. For QatarEnergy, ADNOC and other regional NOCs, the focus has shifted from output growth to restoring export reliability and managing long-term contracts under constrained infrastructure.
On the demand side, Asia’s industry and power sector keep expanding, with 7% growth in 2026 led by China and India, while Europe’s heating and energy security needs sustain imports through 2030. Prices have decoupled from traditional oil linkages, with TTF and Henry Hub up around 35–46%, as roughly one-fifth of global LNG trade remains exposed to Gulf disruptions.
In response, regional trade patterns are also shifting. Europe has sharply increased US LNG imports (up 25% y-o-y), while Asian buyers diversify by adding more Australian cargoes and later blending them with Qatari cargoes as capacity returns. This keeps the market tight through 2028, with price volatility expected to ease only as new US Gulf Coast export terminals come online, while ongoing investments in infrastructure and shipping could help Gulf NOCs further strengthen supply chain reliability in LNG markets over the next decade.
Key risks and uncertainties
Gulf NOCs face dual pressures: immediate physical risks and longer-term market shifts. Reliance on the Strait of Hormuz, carrying 15–20% of global oil and LNG, creates major vulnerability. Refineries and downstream assets remain constrained by logistical bottlenecks, stranded production, full storage and cash flow strains across ADNOC, Aramco, and QatarEnergy.
Escalation duration will determine the speed of recovery. Prolonged issues could keep infrastructure offline for months, even years and stress budgets. Price volatility remains acute: short term spikes above US$120 per barrel continue to alternate with medium term corrections toward 1.1 mbd oversupply by late 2026, as per IEA, driven by non-OPEC+ growth. However, Gulf producers stand ready to resume regular supplies quickly once the conflict ends.
Medium-term demand risks grow, too. Consumption in aviation, petrochemicals, and LPG segments indicates signs of contraction, while limited storage options force additional upstream shut‑ins. Over the longer term, competition from the non-OPEC+ could threaten to cut Gulf market share and pricing influence, particularly if shifts in trade patterns persist.
Key opportunities for NOCs
Market volatility gives Gulf NOCs two key advantages: higher prices that strengthen fiscal resilience and a chance to become essential global energy stabilisers, leveraging ADNOC’s 1–2 mbd spare capacity for swift response. As Dr Al Jaber told the Wall Street Journal, ADNOC can “quickly ramp up production to full capacity” once the conflict ends. Smart storage use and well-timed export could create opportunities to profit from price differences across markets.
Infrastructure diversification also offers resilience. Bypass routes such as Saudi Arabia’s East-West pipeline and the UAE’s Fujairah terminal could reduce chokepoint dependency. Aramco’s strategic-commercial storage in Japan, Korea, China and the Netherlands provides effective buffers. Emerging pathways, such as Red Sea terminals or potential India-Middle East-Europe Corridor (IMEC) linkages, floating LNG units and pipelines could create further options.
Broader strategies could secure long-term leadership. Gulf NOCs should expand LNG capacity to meet Asia’s growing demand with flexible contracts (mixing spot and long-term deals). Vertical integration from production to refining, petrochemicals, and trading, as already practiced by ADNOC and Aramco, would strengthen cash flow. Hedging and reliability branding match importers’ security focus, sustaining Gulf influence through 2030 market tightness.
As Dr Al Jaber put it: “This crisis has revealed two very different visions for the future. One seeks to promote prosperity. And one seeks to spread instability. The UAE made its choice long ago. We built ADNOC into one of the most reliable energy companies on Earth, not because disruption never reaches our borders, but because when it does, we stay the course. That’s why we have diversified how we produce energy. We have expanded the routes that connect supply to markets. We have integrated all sources of energy at scale. We have embedded technology and AI across our operations as the force multiplier that will define the next era of energy.”
Source: ADIPEC
