In a significant escalation of the West Asian conflict, on March 18, Israel attacked Iran’s South Pars gas field, the world’s largest, shared with Qatar across the Persian Gulf. In retaliation, Iran launched missile attacks on energy facilities in Qatar, Saudi Arabia, the United Arab Emirates, Kuwait and Israel.
The US quickly distanced itself from the attack, and President Donald Trump said Israel had acted alone and Tel Aviv would not target the “extremely important and valuable” site again.
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The war with Iran has already caused a massive energy shock to the global economy by halting oil and LNG exports through the Strait of Hormuz. Brent crude rose 5% to $108.66 a barrel on March 18, while U.S. West Texas Intermediate crude rose 2.5% to $98.65 a barrel. Natural gas prices also rose significantly. Beneath the Persian Gulf, straddling the maritime border between Iran and Qatar, lies a reservoir so vast that it has become central to the energy economies of both countries and much of the world beyond.
Qatar’s North Field and Iran’s South Pars combined contain more than 1,800 trillion cubic feet of usable gas, enough to meet the world’s needs for 13 years, according to a Reuters report. The field is shared by Iran and Qatar, giving the two countries the second and third largest reserves of natural gas in the world behind Russia. The field was first discovered in Qatari waters in 1971. South Pars was discovered in 1990. The two countries then took strikingly different paths with the same resource.
Qatar built Ras Laffan Industrial City, a bustling metropolis 80 km north of Doha, to process gas from the field. Today, Ras Laffan processes almost all of the country’s liquefied natural gas and is responsible for around one-fifth of all global LNG supplies. The revenue it generated transformed Qatar from a small emirate in the Persian Gulf to one of the richest countries in the world.
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Iran’s story is taking a different turn. South Pars accounts for 70-75% of total gas production in the Islamic Republic. Gas heats homes, powers factories and the fuel industry. It is the backbone of the country’s domestic energy supply.
US sanctions, first imposed in the early 1980s, effectively shut Iran out of global energy markets. During his first term in office in 2018, Trump withdrew from the 2015 Iran nuclear deal and reimposed tough sanctions on Tehran, leaving part of one of the world’s richest gas reserves trapped behind a wall of geopolitical isolation.
Bonds of India
Escalation of conflict to energy sites in the region is bad news for India. India’s energy relationship with Iran has remained limited as sanctions, security and trade concerns have prevented several ambitious projects from taking off. The two countries had been negotiating a 1,036 km Iran-Pakistan-India gas pipeline, but New Delhi backed out of talks in 2007.
In 2009, ONGC Videsh Ltd. signed (OVL) and Hinduja Group agree to take over stake in Phase 12 of South Pars field along with Petronet LNG. Indian companies were to receive up to 6 million tons of liquefied gas annually. OVL, along with Indian Oil Corporation and Oil India, also planned to invest $5-5.5 billion in the development of the Farzad-B gas field. None of these projects took off.
India, which imports nearly 80% of its oil needs, is heavily dependent on Saudi Arabia, Iraq, Kuwait and the United Arab Emirates. It also imports 60% of its LPG needs and around 50% of its natural gas needs.
“Forty-seven percent of our LNG imports come from Qatar (so), any impact there or anything that affects supplies in the Middle East (West Asia) would affect us,” Sujata Sharma, joint secretary in the petroleum ministry, told reporters on March 19. New Delhi is procuring LNG from alternative suppliers, but these supplies are likely to take some time to arrive.
The Iranian attacks knocked out 17% of Qatar’s LNG export capacity, causing an estimated $20 billion in lost annual revenue and threatening supplies to Europe and Asia. Even if the war ended tomorrow, it could take years for production to return to normal. This means availability would decrease and prices would increase.
In liquefied natural gas markets, where strategic reserves are limited and supply chains stretch across conflict zones, even short-term outages can have far-reaching consequences.
Published – 22 March 2026 01:38 IST
