QatarEnergy turns off LNG and downstream production taps

March 3, 2026, by Melisa Cavcic

Qatar’s state-owned oil & gas giant QatarEnergy has opted to clamp down on output by cutting off the production flow of liquefied natural gas (LNG) and associated products in the wake of the attack on Iran, which the U.S. and Israel launched over the weekend.

Ras Laffan petrochemicals project in Qatar (aerial view); Source: CPChem

QatarEnergy decided to cease production of LNG on March 2, 2025, due to military attacks on its operating facilities in Ras Laffan Industrial City and Mesaieed Industrial City in the State of Qatar. These attacks came as a result of the military campaign the U.S. and Israel are conducting against Iran.

The company, which claims to value its relationships with all of its stakeholders, followed this move by closing the production valves for some downstream products in the Persian Gulf state, including urea, polymers, methanol, aluminum, and other products.

Wood Mackenzie recently explained that the ‘regime decapitation’ strategy deployed by the Trump administration in Venezuela at the start of the year was not instantly replicated in Iran, despite the deaths of senior Iranian leaders. However, the firm is adamant that Iran’s response in the coming days will be critical to the impact on energy markets and the global economy.

The firm underlines that Iran’s declaration on March 1, 2026, of a ‘total war’ on Israel and the United States does not bode well, as the conflict is unlikely to end in a few days, with the Strait of Hormuz being a point of asymmetry that Iran can exploit to counter its military and economic weakness.

WoodMac pinpoints the Middle East oil embargo of the 1970s as the nearest historical analogue, when oil prices jumped 300% in 1974 to around $12/bbl, equivalent to $90/bbl in 2026 terms.

View on Offshore-energy.

The firm outlined: “The global economy is now far less oil intensive than 50 years ago. The shock at the time of the oil embargo was the pace and scale of the price increase. Oil prices would need to reach well over US$200/bbl to exert a similar level of shock to today’s global economy.

“However, a sustained conflict that significantly limits transit via the Strait of Hormuz, elevates oil and LNG prices and weakens an already fragile global economy presents a considerable political risk for the US. A sharp, negative reaction in global financial markets could prompt the Trump administration to look for an off-ramp and deescalate.”

This conflict is a reminder that much of the world’s energy security still depends heavily on oil and LNG exports through the Strait of Hormuz in Wood Mackenzie’s view. The company underlines that the prospect of the Middle East’s share of global oil supply rising from 29% to over 35% by the 2040s will give pause for thought as importing countries assess future energy policy.

As it is believed that the Iranian Supreme leader, Ayatollah Al-Khamenei, was killed on February 28, 2026, along with senior leaders of the Iranian Defence Council, the process of succession is now underway, but the attack represents an existential threat to the current Iranian political and military structure and its leadership.

Currently, the U.S. President Donald Trump is advocating the Iranian people to “take over your government.” In retaliation for the attack, Iran has conducted missile and drone strikes targeting Israel and U.S. military bases across the Gulf Cooperation Council (GCC) region.

Given the hopes for a swift resolution, negotiations are understood to be kicking off with the Iranians, mediated by Oman, as a grave risk of escalation continues to loom. The Strait of Hormuz maritime traffic route and its closure are perceived to present a major risk of disruption to global oil, gas, and LNG markets.

While Iran is reported to have warned shipping not to traverse the Strait of Hormuz, tanker traffic through this waterway has effectively ceased for the time being, after insurance coverage was withdrawn over the weekend. In addition, reports of vessels in the Strait being attacked have surfaced, with the Skylight tanker on fire and its crew evacuated.

Wood Mackenzie concluded: “Even in the most optimistic scenario – one in which the Iranian regime elects to co-operate with the U.S. – it is plausible that it still takes a few weeks for export flows to fully be re-established. During that time, oil prices are heavily risked to the upside.

“In the early days of the Russia/Ukraine conflict, the market’s fear of the potential loss of 3 million b/d of Russian exports drove the oil price from around US$80/bbl to over US$125/bbl before it became clear supplies were largely unimpaired.

“In this conflict, the stakes are higher still with 15 million b/d of Gulf crude and product exports under threat. Failure to quickly re-establish flows through the Strait of Hormuz could again drive prices well over US$100/bbl from Friday’s close under US$73/bbl (Brent).”