Morgan Stanley expects Qatar LNG halt to erase oversupply

Morgan Stanley has reportedly said that Qatar’s suspension of liquefied natural gas (LNG) production will remove most of the global oversupply in 2026.

The market could quickly shift from surplus to deficit if the Qatar LNG outage lasts longer than a month, Bloomberg reported, citing analysts at the investment bank.

Last week, QatarEnergy declared force majeure after halting LNG and associated production as the war between the US-Israel and Iran intensified.

Force majeure allows commodity companies to suspend or cancel contracts when extraordinary events such as war, natural disasters or blockades make it impossible to fulfil them.

Qatar’s energy minister Saad Sherida Al Kaabi told the Financial Times it would take “weeks to months” to return to a normal cycle of deliveries even if the war ended immediately.

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Morgan Stanley projected a global LNG surplus of up to 6 million tonnes in 2026 before the war started, driven by new projects in the US and other regions.

The investment bank has also delayed its expected timeline for the first cargoes from the North Field expansion project to the first quarter of 2027, the report said.

QatarEnergy awarded the final contract last month as part of a series of expansion projects that will raise the Gulf state’s LNG production to 142 million tonnes per annum.

In February 2024, the Gulf state announced plans to expand LNG production at North Field from 77 million tonnes per annum (mtpa) to 142 mtpa by 2030.Al Kaabi said in May 2024 that he was bullish on global LNG demand and that his country was likely to raise production beyond the already-targeted levels for 2030.