Iran’s energy crisis opens a door for Gulf suppliers

The Israel-US-Iran war that began in late February has affected several parts of Iran’s energy infrastructure. Strikes have targeted the South Pars gas field, the petrochemical complex at Asaluyeh, and the Kharg Island crude terminal. At South Pars, two refineries with a combined capacity of around 100 million cubic meters a day were forced to halt production. Storage tanks, installations, and pipelines were also damaged.
Erfan Afazeli, head of the Iranian Petroleum Industry Federation, confirmed that four South Pars refineries had been affected and that the resulting loss of processing capacity had reduced the field’s output by almost one-third. He added that repairs could take between 18 months and two years. South Pars supplies close to 70 percent of Iran’s gas, most of which is consumed domestically. Any prolonged reduction in output would be felt first inside Iran, particularly in power generation and industry during the winter.
The consequences, however, extend well beyond Iran’s borders. Iraq offers the clearest example. For years, its power sector has relied heavily on Iranian gas to keep its plants running. When disruption hit South Pars, deliveries reportedly resumed at around 5 million cubic meters a day, which is below Iraq’s estimated requirement of 30 million. The gap quickly fed into lower power generation, adding to shortages that were already straining the country’s electricity system.
Baghdad responded by increasing electricity imports from Turkiye and the Kurdistan region while looking for ways to diversify its energy supply. This shows a real vulnerability for regional energy buyers as cheap gas offers little security when the supply itself can be disrupted at a moment of crisis.
This is where the position of the Gulf can be well understood. In fact, the replacement of Iranian gas in Iraq is not a realistic short-term option. The infrastructure is not in place and neither the pipelines and terminals nor the contractual arrangements needed to move large volumes can be established overnight. The Gulf’s advantage, therefore, is the credibility of being a reliable supplier when security of supply becomes a higher priority.
Qatar is particularly well positioned to capture the commercial opportunities that may emerge from this shift. Its vast North Field reserves, combined with decades of investment in liquefaction, shipping, long-term contracts, and international partnerships, have given QatarEnergy a depth of experience that few competitors can match. 

The Gulf’s advantage is the credibility of being a reliable supplier when security of supply becomes a higher priority.

Zaid M. Belbagi

The company plans to increase LNG production capacity from 77 million tonnes per year to 142 million by 2030, an expansion of about 85 percent. In a market increasingly concerned with the resilience of supply, that additional capacity matters. Qatar’s low production costs further strengthen its position, allowing it to remain competitive during weaker price cycles, while continuing to invest when higher-cost producers may be forced to pull back.
Qatar’s own experience during the conflict nevertheless complicates this assessment. Strikes on Ras Laffan damaged facilities accounting for about 17 percent of the country’s LNG export capacity, or close to 12.8 million tonnes per annum. According to QatarEnergy, the affected capacity could remain offline for three to five years, and the company subsequently declared force majeure on the deliveries concerned. This shows that extensive reserves and low production costs do not, in themselves, guarantee reliability. For buyers, credibility increasingly rests on whether a producer can protect critical infrastructure and restore output promptly when conditions deteriorate. The recovery of Ras Laffan and the continued progress of the North Field expansion will, therefore, constitute significant tests of Qatar’s standing in this respect.
Saudi Arabia’s opportunity is of a different character and will take longer to materialize. Aramco began production at the Jafurah gas field in December 2025, initially at around 450 million cubic feet per day, with the objective of reaching 2 billion cubic feet per day by 2030. Jafurah is intended primarily for the domestic market, where it will support power generation, industry, and petrochemicals. It cannot serve as a substitute for Iranian pipeline gas in Iraq, since the requisite infrastructure does not exist. Its significance is instead strategic. Each barrel of crude no longer required for domestic use may be exported or held in reserve, affording Saudi Arabia greater flexibility during periods of tightening in international markets.
The UAE occupies a similar position, drawing on its growing role as a gas producer and regional supplier of electricity. The three Gulf states are not following identical paths, but their strategies point in the same direction, which is strengthening the resilience of their energy systems and making them more attractive to buyers looking for alternatives. Qatar’s LNG expansion and Saudi Arabia’s investment in domestic gas, for example, target different markets, but both add capacity and reduce the region’s exposure to external disruptions.
There is, however, one constraint that no amount of investment can easily overcome, which is the Strait of Hormuz itself. During the conflict, maritime traffic has been disrupted, tankers were stranded or diverted, and insurers either withdrew coverage or sharply increased war-risk premiums for vessels transiting the waterway. A producer can have abundant reserves and willing buyers, but those advantages mean little if its cargoes cannot leave the Gulf safely. This makes factors often overlooked in conventional assessments of energy competitiveness increasingly important, from the resilience of export infrastructure and the speed at which damaged facilities can be repaired to the availability of insurance and the diplomatic relationships needed to keep contracts functioning during a crisis.
Iran’s energy disruptions have opened space in the regional market, but filling that space will depend on more than the size of any individual producer’s reserves. The value of energy is increasingly tied to how much a supplier can offer and how confidently buyers can expect it to arrive. That confidence is built through resilient infrastructure and commitments that hold even under pressure.
The coming winter will put that proposition to the test. With demand at its seasonal peak and the margin for disruption at its narrowest, Gulf producers will have an opportunity to demonstrate that their advantage lies in their ability to deliver their resources when it matters most. On current evidence, the Gulf is better positioned than most to do so, but the outcome will depend on execution as much as on endowment.

• Zaid M. Belbagi is a political commentator and an adviser to private clients between London and the Gulf Cooperation Council.
X: @Moulay_Zaid