In a marked escalation of the West Asia conflict, Israel attacked Iran’s South Pars gas field, the world’s largest, shared with Qatar across the Persian Gulf, on March 18. Iran, in retaliation, launched missile attacks on energy facilities in Qatar, Saudi Arabia, the UAE, Kuwait and Israel.
The U.S. was quick to distance itself from the attack, with President Donald Trump saying that Israel acted alone and that Tel Aviv would not target the “extremely important and valuable” site again.
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The war on Iran had already dealt a massive energy shock to the global economy by choking off exports of crude oil and LNG 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 shot up significantly. Beneath the Persian Gulf, straddling the maritime boundary between Iran and Qatar, lies a reservoir so vast 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 together contain more than 1,800 trillion cubic feet of usable gas, enough, according to a Reuters report, to supply the world’s needs for 13 years. The field is shared by Iran and Qatar, giving both countries the second and third largest natural gas reserves 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 embarked on strikingly different journeys with the same resource.
Qatar built Ras Laffan Industrial City, a bustling metropolis 80 km north of Doha, to process the gas from this field. Today, Ras Laffan processes nearly all of the country’s LNG and is responsible for approximately one fifth of the world’s entire LNG supply. The revenues it generated transformed Qatar from a small Gulf emirate into one of the wealthiest countries on earth.
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Iran’s story takes a different turn. South Pars accounts for 70-75% of the Islamic Republic’s total gas production. The gas heats homes, powers factories, and fuel industries. It is the backbone of the country’s domestic energy supply.
U.S. sanctions, first imposed in the early 1980s, effectively shut Iran out of global energy markets. Mr. Trump withdrew from the 2015 Iran nuclear deal in 2018, during his first term, and reimposed tough sanctions on Tehran, leaving part of one of the world’s richest gas reserves stranded behind a wall of geopolitical isolation.
India’s ties
The escalation of the conflict into energy sites in the region is bad news for India. India’s energy relationship with Iran has remained limited as sanctions, security and commercial concerns kept several ambitious projects from taking off. The two countries discussed a 1,036-km Iran-Pakistan-India gas pipeline, but New Delhi stepped back from talks in 2007.
In 2009, ONGC Videsh Ltd. (OVL) and the Hinduja Group signed agreements to pick up a stake in Phase 12 of the South Pars gas field, along with Petronet LNG. The Indian companies were to receive up to 6 million tonnes of liquefied gas annually. OVL, along with Indian Oil Corporation and Oil India, also had plans to invest $5-5.5 billion in developing the Farzad-B gas field. None of these projects took off.
India, which imports nearly 80% of its crude oil needs, is heavily dependent on Saudi Arabia, Iraq, Kuwait and the UAE. It also imports 60% of its LPG needs and around 50% of its natural gas requirements.
“Forty-seven percent of our LNG imports are from Qatar, [therefore], any impact there or anything which affects supplies in the Middle East [West Asia] would impact us,” Sujata Sharma, Joint-Secretary at the Ministry of Petroleum and Natural Gas told reporters on March 19. New Delhi is procuring LNG from alternative suppliers, but those supplies will take time to arrive and are likely to be more expensive.
Iranian attacks have 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 ends tomorrow, it could take years before production is normalised. This means that availability would be reduced, and the prices are elevated.
In LNG markets, where there are limited strategic reserves and supply chains stretch across conflict zones, even short-term disruptions can have outsized consequences.
Published – March 22, 2026 01:38 am IST
