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Conflict in the Middle East
The outbreak of war in the Middle East has created the most significant supply and price shock for global energy markets since the Ukraine war started.
Events are moving very quickly, and global energy prices have become highly volatile, with large swings off the back of the latest news and market sentiment.
In this month’s report we present high-level data points to assist in interpretating how events are playing out and what their future impact might be.
The key issue for global markets is, of course, that no, or very little, seaborne trade is transiting the Strait of Hormuz. The Strait accounts for over a third of crude oil seaborne trade and around 20% of LNG trade, the bulk of which comes from Qatar. The Strait also sees much of the world’s seaborne trade in petroleum products including fertilisers.
The sudden loss of supply of crude oil and LNG caused by the conflict has resulted in steep price rises. Brent oil was trading at US$62.54/bbl in December 2025 and peaked at over US$110/bbl in March 2026. The JKM LNG benchmark price was $10.31/MMBtu in December and rose to almost US$16/MMBtu in March. These are significant price movements, but it is also worth noting that Brent prices today are comparable to those seen in 2023.
Looking further out, futures pricing for Brent and JKM indicate an expectation that the conflict will not have a long-term impact, with prices declining over the course of 2026 and falling back to previous levels in 2027.
The loss of oil supply via the strait is significant for global markets; but there are options to increase oil supply in the short term. the International Energy Agency (IEA) has announced the largest ever oil emergency stockpile release to address oil market disruptions, adding 100 MMbbls of supply at a rate of 3.3 MMbbls/d. The increase in supply from the IEA accounts for around 20% of the lost supply.
Additional supply will be coming from Saudi Aramco’s East-West pipeline, which is ramping up to its full 7 MMbbl/d capacity. However, Aramco does not have inventory to sustain pipeline volumes over the long term and neither do IEA members, and the additional supply expected to flow soon does not fully replace lost supply from the Strait of Hormuz.
On the LNG front, there is less ability to increase short-term supply as LNG facilities typically run at capacity and LNG is not stockpiled by IEA members in the same manner as oil.
While Australia is quietly quitting LNG, Qatar is implementing projects to expand LNG production from the North Field, the world’s largest single non-associated gas field. Current production capacity is 77 Mtpa, with plans for a phased increase to 142 Mtpa by the end of 2030. The scale of this expansion over the next five years alone approaches Australia’s total LNG exports. The impact of the closure of the Strait on these expansion plans remains to be seen but may be significant. Qatar has to date been considered a reliable LNG exporting partner – and reliability remains prized by LNG importers who, as mentioned, typically do not maintain large LNG stockpiles but do require LNG for energy security.
Events in the Middle East are evolving rapidly. If the closure of the Strait lasts much longer, we may see the most significant energy shock in generations. Should countries start running low on energy supplies, the debate around energy supply will shift to one centred on security and affordability, with emissions intensity potentially being relegated to third place.
We can already see significant impacts from the Iran conflict, but the long-term effects for Australia may be substantial.
Monthly LNG statistical summary
Based on shipping data, EnergyQuest estimates that Australia exported 6.26 Mt of LNG in February 2026, totalling 90 cargoes. This represented a decrease of 11.6% from January 2026, when exports totalled 7.08 Mt, for 102 cargoes. When annualised, February’s exports represent 81.6 Mtpa, equivalent to 94.9% of the total Australian nameplate capacity of 86.0 Mtpa.
EnergyQuest estimates Australian LNG export revenue of $3.91 billion in February 2026 (three fewer operating days) – down by $0.89 billion (-18.2%) from $4.80 billion in January 2026, and lower than $4.95 billion in December 2025. The February 2026 result was also lower than the November result of $4.85 billion, the October result of $4.52 billion and the September result of $4.20 billion.
Combined, the five WA projects (NWS, Pluto, Gorgon, Prelude, and Wheatstone) shipped 50 cargoes for 3.56 Mt during February 2026, nine cargoes fewer than the 59 cargoes for 4.15 Mt they shipped during January 2026.
The Ichthys LNG project and the Darwin LNG project shipped 11 cargoes for 0.81 Mt during February 2026, which was down by one cargo compared to 12 cargoes for 0.89 Mt in January 2025 and 12 cargoes for 0.91 Mt (Ichthys only) in December 2025.
During February 2026 the Queensland projects shipped 29 cargoes for 1.89 Mt, down by two cargoes compared to 31 cargoes for 2.04 Mt in January 2026. The February result was also down compared to 33 cargoes for 2.13 Mt in December 2025, 31 cargoes for 2.00 Mt in November 2025, and 33 cargoes for 2.14 Mt in October.