Gulf supply disruptions tighten market, while Brazil’s reliance on alternative suppliers may soften local effects
The war in the Middle East has pushed liquefied natural gas (LNG) prices up by more than 70%, driven by two main factors: the halt in supply from Qatar, one of the world’s largest exporters, and the closure of the Strait of Hormuz in the Persian Gulf, through which about 20% of global oil flows. In Brazil, however, the impact of the LNG price surge on domestic prices is expected to be limited, according to experts interviewed by Valor.
Before the conflict began, on February 27, LNG was priced at €32.38 per megawatt-hour (MWh). By Monday (9), it had risen to €55.86 per MWh, a 73% increase in the European Title Transfer Facility (TTF) market, one of the main global benchmarks for the commodity.
After a bombing at the Ras Laffan facility in Qatar on March 2, QatarEnergy suspended LNG production. One of the main challenges resulting from the shutdown is the lack of viable alternative routes for transporting large volumes, which has pushed prices higher. The International Energy Agency (IEA) warns that a prolonged supply interruption could worsen shortages in the market.
Vitor Santos, a professor of economics at the Lisbon School of Economics & Management (ISEG), said the closure of the Strait of Hormuz limits export capacity for several producing countries. Importers, meanwhile, face supply difficulties. “The closure of the Strait of Hormuz harms producers in the Persian Gulf and the main Asian consumers of oil and natural gas, which have a high dependence on fossil fuel imports,” Santos said.
An analysis by the Oxford Institute for Energy Studies (OIES) in June 2025 had already assessed that a global LNG price shock triggered by the closure of Hormuz could resemble the surge seen in 2022 after Russia invaded Ukraine, when spot prices approached $30 per million BTU. “Another price shock similar to that of 2022 could bring direct consequences to government budgets in Europe and Asia,” the study said.
In Brazil, LNG began to be used in the 2000s as the country struggled to expand its natural gas supply for thermal power generation. Petrobras installed three regasification terminals at the time—one in Rio de Janeiro, one in Ceará, and another in Bahia. Today, Brazil has six LNG terminals in operation. According to experts, price and supply effects in the local market should remain limited.
Rodrigo Borges, managing director of Aurora Energy Research in Brazil, said that when LNG prices surge globally, the marginal cost of thermal plants increases, potentially pushing up electricity prices in Brazil, particularly when the power system needs to activate these plants.
Diogo Lisbona, a researcher at FGV Ceri, explained that energy and natural gas prices could reflect the effects of the war in the short term. This is because large consumers and some thermal plants operate under contracts with quarterly adjustments linked to the weighted average of Brent crude prices.
Rivaldo Moreira Neto, managing partner at A&M Infra, said oil markets are broader and allow some mitigation of Hormuz-related disruptions through increased production elsewhere in the world. LNG, however, does not have the same flexibility. Moreira noted that Europe and Asia are major consumers of Qatari LNG and emphasized that the Hormuz blockade is more significant for LNG than for oil.
“Brazil, as an importer, is not necessarily expected to face supply interruptions, since we import from the United States and the United Kingdom. The issue is price, which should rise significantly,” Moreira said.
Adriano Pires, a partner at the Brazilian Infrastructure Center (CBIE), believes any effects will likely be limited and related to potential rerouting of ships to meet specific demand. Pires noted that in Brazil, natural gas is generally traded through long-term contracts. Concern may focus on the capacity reserve auction scheduled for March 18.
According to PSR Consultoria, the impact of the crisis on Brazil’s market will depend on how many thermal plants have fuel costs tied to international prices and how these indicators evolve. “If the crisis persists, pressure on these indices will be strong, leading to higher variable costs for thermal plants and impacts on electricity prices,” PSR said.
One point of attention is the availability of gas for thermal plants during the conflict and how much Middle Eastern supply could be replaced by U.S. exports. PSR notes that the United States is expected to add around 60 million tonnes per year of new LNG export capacity between 2026 and 2027. “Although this volume would not replace Qatar, it is a robust amount that could help cushion demand in a prolonged crisis.”
By Fábio Couto — Rio de Janeiro
Source: Valor International
https://valorinternational.globo.com/