WoodMac Finds 'No Consensus' on Gulf Crisis Resolution

Wood Mackenzie (WoodMac) “found no consensus” on when the Gulf “crisis” will be “resolved” at its latest annual gas and LNG conference held in London recently, a statement sent to Rigzone by the company revealed.

The statement, which was penned by WoodMac Chairman and Chief Analyst Simon Flowers, with the help of several other WoodMac analysts, outlined several company takeaways from the conference.

“We found no consensus on when the crisis in the Gulf will be resolved,” the statement noted.

“Prices will remain elevated come what may for the next 18 months, with the absence of damaged Qatari capacity and delays on projects under construction keeping the market tight,” it added.

“However, there is a sense of complacency subduing prices today below where they should be on the assumption that exports will resume soon. If they don’t, then upward price pressure will intensify as winter 2026/27 looms,” it warned.

QatarEnergy said in a statement posted on its website on March 20 that it expects damage to its Ras Laffan Industrial City caused by missile strikes to cost about $20 billion a year in lost revenue and to take up to five years to repair. The company - which highlighted in the statement that the strikes occurred on March 18 and March 19 - outlined that the damage will impact supply to markets in Europe and Asia.

The WoodMac statement also highlighted that there was “much heated discussion on the upside risks to U.S. gas prices, and the implications for global LNG prices” at its London conference.

“The Wood Mackenzie view is that a powerful combination of rising LNG exports and soaring demand for power from mushrooming data center build-out will drive up Henry Hub to just under $5 per million British thermal units (real) by 2035,” the statement said.

“One observer challenged the impact data centers will have on gas demand. Moreover, U.S. LNG developers argued that the depth and quality of remaining shale resource and productivity gains will keep Henry Hub prices modest, securing U.S. LNG as the marginal cost production for the foreseeable future,” it added.

“Another point well-made was that Henry is the high price U.S. benchmark, with cheaper options available across North America, not least in Canada,” it continued.

In an EBW Analytics Group report sent to Rigzone on Monday, Eli Rubin, an energy analyst at the company, highlighted that, “after climbing to a ten-week high last Thursday, the July [Henry Hub] natural gas contract ran into a bearish weekend trifecta of milder weather forecasts, weak LNG, and rising supply - reinforcing resistance”.

EBW predicted a “begins to fade” trend for the NYMEX front-month natural gas contract price over the next 7-10 days and a “begin to weaken structurally” trend over the next 30-45 days in the report.

WoodMac’s statement also outlined that there was a “positive vibe for the medium term” at its conference.

“There was near unanimity that LNG will remain central to the global energy mix beyond the crisis,” it said.

“Wood Mackenzie’s forecast that demand will grow by almost 60 percent by 2035 - up to 690 million tons per annum - assuming a swift resolution of the conflict didn’t attract any pushback from guests,” it added.

“Suppliers were less enthused by our ‘extended disruption’ scenario, with demand growth of 45 percent,” it revealed.

“The positive vibe reflects LNG’s proven adaptability, having flourished after the Covid and Russia/Ukraine crises. Following the current crisis, the industry’s focus will be on building resilience to withstand future disruption,” it continued.

The WoodMac statement also outlined that “supply diversification” was one of the talking points at its conference, noting that there was “no surprise that some buyers want to diversify away from the Middle East” but adding that “it’s too early to pick the favored sources”.

“Geographical proximity, political stability, and government to government relationships will be important, while for the wealthier economies, security of supply and reliability will trump price up to a point,” it said.

Another takeaway from the conference, according to the statement, was that Gulf states “are looking for alternative export routes to circumvent the Strait of Hormuz in future crises”.

In a report sent to Rigzone by the Fitch Ratings team on Monday, analysts at the company noted that Fitch Ratings’ base case Brent oil price of $87 a barrel on average for 2026 “reflects the agency’s assumption that the Strait of Hormuz will reopen around the end of July, implying an effective five-month closure”.

In a report sent to Rigzone on Thursday by Natasha Kaneva, J.P. Morgan’s head of global commodities strategy, analysts at J.P. Morgan, including Kaneva, revealed that their base case continued to assume that the Strait of Hormuz reopens in June.

In a HSBC note dated May 6, which was sent to Rigzone by the HSBC team, analysts at the company, including HSBC Senior Global Oil & Gas Analyst Kim Fustier, revealed that their base case assumed that Hormuz traffic and Gulf output gradually restart from mid‑June.

To contact the author, email andreas.exarheas@rigzone.com