Two Qatari LNG vessels, initially permitted to transit, were intercepted and turned back by Iran's Revolutionary Guard. Simultaneously, Saudi Aramco imposed a record-high crude premium for Asian buyers. Goldman Sachs cautioned that the impact of the Middle East energy crisis on Asian supply chains is entering a critical third phase.
According to reports, Iran's Revolutionary Guard intercepted two Qatari LNG carriers heading towards the Strait of Hormuz on Monday morning, ordering them to hold position. The vessels had originally received transit permission under a framework negotiated with Pakistani mediation. Successful passage would have marked the first LNG shipments through the strait since conflict erupted following US-Israeli strikes on Iran on February 28th. Ship-tracking data showed that as of Monday evening, both vessels remained near the UAE coast, having failed to transit the strait.
Concurrently, Saudi Aramco announced it was raising the official selling price premium for its flagship Arab Light crude bound for Asia in May to a record $19.50 per barrel above the regional benchmark. From Qatar, QatarEnergy CEO Saad al-Kaabi disclosed that Iranian attacks have damaged 17% of Qatar's LNG export capacity, causing estimated annual losses of $20 billion, with related production expected to be offline for three to five years.
Goldman Sachs analyst Yulia Grigsby noted that the transmission of this energy crisis to Asian supply chains is entering a third phase—rising costs for energy and petrochemical feedstocks will comprehensively permeate the pricing structures of Asia's export-oriented economies.
**LNG Vessels Turn Back: Hormuz Passage Effectively Blocked** Citing informed sources, reports indicated Iran's Revolutionary Guard intercepted the QatarEnergy-owned vessels *Al Daayen* and *Rasheeda* on Monday, instructing them to halt. The ships had previously received transit clearance under negotiations led by Pakistan, with original destinations set for China and Pakistan, respectively.
Ship-tracking data showed the *Al Daayen* altered course and began signaling a return to Qatar's Ras Laffan port, while the *Rasheeda* switched its status to "awaiting orders." Both vessels had loaded at Ras Laffan in late February, with their cargoes stranded for over five weeks during the strait's blockade.
Previously, the Japanese LNG carrier *Sohar LNG* successfully transited the strait, a fact confirmed by co-owner Mitsui O.S.K. Lines last Friday, although the vessel was in ballast (empty) at the time.
The Strait of Hormuz handles approximately one-fifth of global oil and LNG flows. Since the conflict began, the waterway has been effectively blockaded. While a statement on March 26th indicated Iran had agreed to allow 10 tankers to transit, the interception of the LNG vessels suggests high uncertainty remains regarding the implementation of any such agreement.
**Saudi Premium Hits Record: Red Sea Diversion Costs Passed to Buyers** A price list obtained by Bloomberg showed Saudi Aramco set the premium for May-loading Arab Light crude for Asia at a record $19.50 per barrel above the benchmark. However, this figure was below the $40 per barrel premium traders and refiners had anticipated in prior surveys.
Oil traders explained the premium falling short of expectations was partly due to volatile and declining Middle East crude prices in the final week of March. A more significant structural factor is that Saudi Aramco has fully switched its export route from the Ras Tanura port on the Arabian Gulf to the Yanbu port on the Red Sea coast. Since the pricing benchmark remains based on loading from Ras Tanura, buyers must bear the additional transportation costs.
Aramco CEO Amin Nasser stated in a March 10th conference call that the company had suspended most medium and heavy crude production, currently focusing on selling light and extra-light crude via Yanbu. The pipeline to the Red Sea coast is operating at its maximum capacity of 7 million barrels per day, with current daily exports around 5 million barrels, approximately 70% of pre-war total exports.
Brent crude has risen over 50% since the conflict began. Saudi Arabia and the UAE are the only two Gulf producers with significant alternative export channels capable of bypassing the Hormuz bottleneck.
**Qatar LNG Severely Hit: $20 Billion Annual Loss, Long-Term Supply Gap for Europe and Asia** QatarEnergy CEO Saad al-Kaabi stated that Iranian attacks destroyed two of Qatar's 14 LNG production trains and one of two gas-to-liquids facilities, idling 12.8 million tonnes per year of LNG capacity. The repair period is estimated at three to five years, with annual losses projected at $20 billion.
Qatar is the world's second-largest LNG exporter, with its exports heavily concentrated in Asian markets. QatarEnergy may be forced to declare force majeure on long-term contracts supplying Italy, Belgium, South Korea, and China, potentially for up to five years. US oil major ExxonMobil, a partner in the damaged facilities, holds a 34% stake in the "S4" train and a 30% stake in the "S6" train.
The impact of the attacks extends to other energy products: condensate exports are expected to fall by 24%, liquefied petroleum gas by 13%, helium by 14%, and naphtha and sulphur each by 6%. al-Kaabi expressed profound shock at the scale of the attack on Qatar and the wider region, particularly from a fellow Muslim nation and during the holy month of Ramadan.
**Regional Infrastructure Damage: Kuwait, UAE, Bahrain Hit in Succession** The destructive scope of the conflict has spread to energy infrastructure in multiple Gulf states.
Kuwait Petroleum Corporation (KPC) reported "significant material damage" to its facilities from Iranian drone strikes, targeting assets belonging to Kuwait National Petroleum Company (KNPC) and Petrochemical Industries Company (PIC). Multiple fires broke out but were contained by emergency teams. Prior strikes had also targeted the Mina Al-Ahmadi and Mina Abdullah refineries and Kuwait Airport.
In the UAE, a fire triggered by debris from intercepted missiles forced the temporary shutdown of the Borouge petrochemical plant in Ruwais, Abu Dhabi, on Sunday. Borouge, a joint venture between Abu Dhabi National Oil Company (ADNOC) and Borealis, has a nameplate capacity of approximately 5 million tonnes per year of polyolefins. Two days earlier, a fire also halted operations at the Habshan gas complex, Abu Dhabi's largest gas processing facility. Bahrain's Bapco Energies reported a fire at a storage facility following an Iranian drone strike, which has since been extinguished.
Hours before these attacks, Iran's semi-official Fars News Agency published a "target list" including power, water, steam facilities, and oil, gas, and petrochemical assets, which also featured PIC.
**Goldman Sachs Warning: Asian Supply Chain Shock Enters Third Phase** According to analysis by Goldman Sachs' Yulia Grigsby, the impact of the Middle East energy crisis on global supply chains follows three sequential phases.
The first phase involved the disruption of Middle Eastern oil exports, which occurred at the onset of the conflict. The second phase was the contraction of key market imports—this became apparent in the second half of March as tankers that had departed the Middle East in late February began arriving at their destinations.
The crisis is now entering the third phase: increased input costs for energy and petrochemical feedstocks (including plastics, etc.) will gradually transmit into the price structures of a wide range of global goods, predominantly supplied by export-oriented Asian economies.
Goldman's analysis implies the shock's effects will spread from energy markets to broader manufacturing and consumer goods sectors, posing systemic pressure on Asian economies deeply embedded in global supply chains. Although Iraq has reportedly received an exemption from Iran and notified Asian buyers that loadings can resume, buyers are still seeking further confirmation regarding transit safety guarantees, suggesting market uncertainty is unlikely to dissipate soon.
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