LNG Shortage: Qatar’s Ras Laffan Industrial City, the world’s largest LNG export hub, came under intense attack by Iran’s ballistic missiles, threatening the supply of liquefied natural gas (LNG) across the world. India, one of the biggest importers of LNG from Qatar, may feel the biggest pinch of the attacks with the country’s gross domestic product (GDP) likely to get hit.
Multiple sectors and industries of the country stare massive losses or eroding profits due to the severe energy crisis caused as Qatar’s LNG exports grind to a halt.
LNG Shortage-Iran’s Strike On Ras Laffan
The Islamic Republic of Iran made retaliatory attacks on oil and gas facilities in the Middle East to mark an unprecedented transition to an economic war from military confrontations. After strikes by Israel on Iran’s South Pars gas field, the Islamic Republic responded with “an eye for an eye” attack by striking Qatar’s Ras Laffan Industrial City.
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40 Percent Of India’s Gas From Qatar
India relies heavily on Qatar for approximately 40 percent of its LNG imports every year, making the shutdown of Qatar’s LNG facilities a direct and severe blow to India’s energy security. Cargo suspensions are on the cards and supplies are likely to be cut by 30-40 percent for industries and gas firms of the country.
Inflated Import Bills
A prolonged Qatar outage could easily inflate the annual import bills of India by many billions, straining the already-pressurized trade deficit by high oil costs.
Urea Shortages, Higher Food Prices
Fertilizer producers in the country utilizing natural gas for urea production would face feedstock shortages, risking supply crunches and output halts. Since India imports approximately over 50 percent of its urea requirements, gas cuts could trigger massive shortages, inflating food prices as farmers would be pushed to costlier alternatives. With monsoon planting season ahead, this could also threaten kharif crop yields and overall food inflation.
Higher Electricity Costs For Consumers
Power Plants utilizing regasified LNG would make a switch to costlier liquid fuels such as diesel, passing on hikes via tariffs to consumers. Peak summer demand could easily translate to grid blackouts, resulting in shortage of electricity output in the country. This would severely impact MSMEs and households due to high energy costs.
Strained Forex Reserves, CPI Surge
India’s already stretched forex reserves could face further depletion from panic buying of spot LNG at exorbitant prices. A spike in consumer price index (CPI) could be on the cards as energy pass-through would ripple into food, transport and utilities that would push inflation by 2-3 percent.
If LNG supplies stay offline into April or May, the GDP growth of India could risk a loss of 0.5 to 1 percent for FY26. Over time, corporate earnings should shrink further. Gas-dependent industries such as steel, refineries and chemicals could face massive curtailments, eroding profit margins as they import pricier alternatives or slowed operations.
