Modi Seeks to Calm India as Iran War Causes Acute Gas Shortage

India’s Prime Minister Narendra Modi said the country has sufficient energy supplies to meet domestic demand, even as he warned the Iran conflict creates unprecedented challenges for the world’s fastest growing large economy. The war in the Middle East, now in its third week, has roiled energy markets, cutting off flows of crude oil and liquefied natural gas to the world and driving up prices. India is a major importer of LNG and other petroleum fuels from the region, and disruptions have already started to hit various industries, from ceramic factories and restaurants to fertilizer makers and oil refiners.

Modi said India holds 5.3 million metric tons of strategic oil reserves and is working to expand that to 6.5 million. He added that New Delhi is helping ensure safe transit for Indian vessels stranded in the Middle East. Two Indian-flagged ships carrying liquefied petroleum gas made the passage earlier this month, while two more are currently transiting the Strait of Hormuz.

Hormuz, a vital waterway that connects oil and gas producers in the Persian Gulf with the wider world, has been all but closed since US and Israeli strikes began at the end of February. Authorities are closely monitoring Gulf shipping routes and working to safeguard maritime trade. Modi also said the country has adequate food stocks and assured farmers of government support.

How Is the Global LNG Supply Being Affected?

QatarEnergy’s chief executive, Saad al-Kaabi, said Iranian attacks have wiped out 17% of Qatar’s liquefied natural gas export capacity, resulting in $20 billion in lost revenue. The strikes damaged two of Qatar’s 14 LNG trains and one of two gas-to-liquids facilities, and repairs will cost 12.8 million tons of LNG per year over three to five years. QatarEnergy will have to declare force majeure on long-term contracts for up to five years due to the damage.

The outage significantly reduces the expected global LNG oversupply. Earlier forecasts projected a surplus through 2028 to 2031, but the disruption cuts that roughly in half and delays any major oversupply until at least 2029. This tightening of supply is creating new opportunities for LNG producers such as Cheniere Energy, which is already more than 90% contracted through 2026 and beyond.

How Are Energy Markets Reacting?

Cheniere Energy shares surged 5.88% on Thursday, supported by global LNG supply disruptions and expanded long-term deals with Thailand. The company also priced a $1 billion dual-tranche senior notes issuance. The stock was further boosted by global LNG supply disruptions and a 30% spike in European natural gas prices.

Thailand is negotiating to increase its long-term LNG procurement volume from Cheniere by 30%, from 1 million tons per year to 1.3 million tons, with the first delivery expected this quarter. The tighter global market could help Cheniere secure the two to three million tons per annum of new long-term contracts it needs to move forward with additional projects, including further expansion at Sabine Pass and Corpus Christi Train 4.

What Are Analysts Watching Next?

BofA Securities raised its price target on Cheniere Energy from $296 to $322 while reiterating its buy rating. The firm noted that the longer the disruptions continue, and particularly if there are more attacks on Middle East gas infrastructure, the more it would expect future contracting to be with the US.

India’s economic growth forecasts have been cut as a result of the oil price surge and acute gas shortages. Goldman Sachs cut its 2026 growth forecast to 6.5% while IndusInd Bank warns of a 30-basis-point hit to growth. The disruption has triggered a cooking gas crisis across households, hotels and restaurants, while industries that rely on LPG are shutting down operations.

The Indian rupee is also under pressure, having hit a record low of 92.4750 against the U.S. dollar. Banks are recommending cross-currency trades targeting rupee weakness against the Chinese yuan and Singapore dollar. Analysts believe the government has enough fiscal space to absorb the oil price hit through excise duty cuts, but the hit on the industrial sector will impact growth.