Qatar, UAE lower LNG contract prices amid Middle East tensions

Energy buyers in Asia and Europe are pushing for cheaper prices and more flexible contracts from Qatar and the United Arab Emirates after recent conflict disrupted major gas supplies.

For years, low production costs and vast reserves made Gulf nations the most reliable gas suppliers in the world. However, because most of their gas must travel through the narrow Strait of Hormuz, ongoing military conflicts and blocked shipping routes have weakened their leverage in contract talks.

Together, Qatar and the UAE account for about 20 per cent of the world’s liquefied natural gas (LNG) export capacity. With ships unable to pass safely through the area, QatarEnergy was forced to shut down processing plants and pause deliveries.

The cancellations have directly affected European and Asian energy importers. Italian energy company Edison, which gets about 10 per cent of Italy’s yearly gas from Qatar, confirmed that shipments have been cancelled from April through early September under force majeure. Nicola Monti, chief executive of Edison, warned that anyone signing new gas contracts in the region will face much higher insurance costs for ships passing through dangerous waters.

To offset these high insurance rates and shipping risks, global buyers are demanding price cuts. Long-term gas deals from the region used to be linked to crude oil prices at around 12.6 per cent. Recent agreements have dropped closer to 12.3 per cent, showing that importers are already securing discounts.

Bangladesh's position & vulnerability

While major Asian and European economies leverage the crisis to demand better terms, developing import-dependent nations like Bangladesh face severe energy and economic challenges.

· Heavy Gulf dependence: Qatar supplies over 60 per cent of Bangladesh’s imported LNG. Because every Qatari shipment must cross the Strait of Hormuz, any prolonged blockage directly threatens Bangladesh’s domestic power generation and industrial output.

· Rising subsidy and import bills: With long-term deliveries disrupted, state-owned Petrobangla is forced to turn to expensive spot markets. Officials estimate that replacing long-term Qatari supply with spot cargoes could add tens of millions of dollars to Bangladesh’s monthly energy bill, worsening foreign reserve pressures.

· Strategic shift toward diversification: To reduce exposure to the Hormuz corridor, Bangladesh energy officials are increasingly looking to diversify supply routes—exploring higher volumes from Oman (which exports outside Hormuz) alongside regional pipeline grid connections.

Neither QatarEnergy nor Abu Dhabi’s state energy company commented on ongoing contract negotiations or when full shipments will resume.

Strategic shift toward diversification:

To reduce exposure to the Hormuz corridor, Bangladeshi energy officials are increasingly looking to diversify supply routes—exploring higher volumes from Oman (which exports outside Hormuz) alongside regional pipeline grid connections.

Neither QatarEnergy nor Abu Dhabi’s state energy company commented on ongoing contract negotiations or when full shipments will resume.

Global LNG destinations overview

The global LNG market remains heavily centred on Asian demand, followed by Europe’s expanded import requirements: