Could War with Iran Disrupt Britain’s Gas Supplies?

The unfolding confrontation between the United States and Israel on one side and Iran on the other presents a fresh test for the global energy system. This is a particularly sensitive juncture for the world economy, as geopolitical risks intensify across critical maritime chokepoints, foremost among them the Strait of Hormuz, the Bab El-Mandeb and the Suez Canal.

Iran’s Islamic Revolutionary Guard Corps has announced the closure of the Strait of Hormuz and claimed to have targeted several oil and commercial tankers, alongside strikes on airports in Gulf states.

Whether fully enforced or partially symbolic, such moves inject a significant geopolitical risk premium into already fragile energy markets.

In this context, the prospect of delayed liquefied natural gas (LNG) shipments—particularly from Qatar—emerges as a material risk for the United Kingdom. The consequences would not be confined to Britain’s energy market but could ripple across global trade and economic stability. The timing is delicate: March and April mark the transition from peak winter demand to the critical storage refill season ahead of the next heating cycle.

Political Tensions Squeeze Global Energy Arteries

Roughly 20 per cent of global oil and LNG trade transits the Strait of Hormuz, making it one of the world’s most strategically consequential maritime corridors. Its importance rivals that of the Suez Canal and the Bab El-Mandeb, both indispensable to trade flows between Asia and Europe.

Any disruption in these routes would raise maritime transport costs as vessels divert around the Cape of Good Hope. Insurance premiums would rise commensurately with perceived risk. Transit times for energy cargoes and strategic goods would lengthen, prompting markets to reprice risk across energy contracts and futures markets.

Even temporary interruptions can reverberate through pricing structures, as traders adjust expectations and hedge against prolonged instability.

Qatari Gas in Britain’s Supply Architecture

Qatar ranks among the world’s largest LNG exporters and plays a significant role in supplying the United Kingdom, particularly after the structural decline of North Sea production and the sharp reduction in Russian pipeline flows to Europe since 2022.

LNG accounts for roughly one-fifth of UK natural gas supply. Britain’s import mix relies primarily on Norwegian pipeline flows and LNG cargoes from Qatar and the United States, supplemented by domestic storage.

Yet the UK’s storage capacity remains modest compared with that of Germany or France. Even after the reopening of the Rough storage facility, total capacity covers only a relatively short portion of winter demand. In a plausible post-winter scenario, storage levels may stand at around 45 per cent at the beginning of March 2026, which is operationally sufficient, but offering limited cushion should shipments be delayed or an unseasonably late cold spell emerge.

Although seasonal heating demand eases in March and April, the market simultaneously enters the storage refill phase. The continuity of LNG inflows therefore becomes central to price stability.

What If Qatari LNG Shipments Are Delayed?

A delay of two weeks to one month in Qatari LNG deliveries would likely tighten the European LNG market. Spot prices could rise by 15–30 per cent, depending on the extent to which alternative suppliers compensate for the shortfall.

In a relatively benign scenario, average gas prices could increase from €42 per megawatt hour in March to €55 in April if delays coincide with sustained maritime tensions. Such increases would feed directly on UK wholesale contracts.

Disruption during the refill period could also slow storage injections by five to ten percentage points relative to the baseline trajectory—potentially reducing stock levels from 48 per cent to 41 per cent within a month under continued stress.

For Britain’s economy—still grappling with elevated public debt, subdued investment and the lingering aftershocks of previous energy crises—the impact would extend beyond commodity markets.

Higher gas prices would raise electricity generation costs at a politically sensitive moment. Prime Minister Keir Starmer has pledged to reduce household energy bills, while the government seeks to stimulate industrial output. A renewed energy price spike would complicate both objectives amid persistent inflationary pressures affecting households and businesses alike.

Each sustained 20 per cent increase in gas prices could add between 0.2 and 0.4 percentage points to annual inflation if maintained for several months. Prolonged price strength could also delay interest-rate cuts and weigh on an economy still recovering from successive shocks.

Implications for Global Trade and the World Economy

Disruptions to energy corridors would not only affect gas markets. They would also feed into global trade dynamics through higher freight costs, longer shipping times between Asia and Europe, and rising prices for intermediate goods critical to manufacturing supply chains—many of which originate in Asia.

A protracted disruption in the Arabic Gulf could shave up to one percentage point off annual global trade growth, while adding inflationary pressure across energy-importing economies.

Emerging markets reliant on imported energy would prove especially vulnerable, whereas some exporting countries might benefit temporarily from higher prices.

At the same time, repeated crises in the Middle East reinforce structural imperatives. For the United Kingdom, these include diversifying LNG supply sources, expanding strategic storage capacity and accelerating investment in renewable energy to reduce sensitivity to gas-market shocks.

Britain is also moving to deepen coordination with European partners, particularly in emergency energy management and strategic resilience planning.