Middle East conflict threatens global gas supply and Iranian industry

Conflict in the Persian Gulf region and disruptions in energy transit routes are creating shocks in the global natural gas market. The Strait of Hormuz is a critical corridor, previously handling approximately one-fifth of the global liquefied natural gas (LNG) supply. Disruptions in this waterway threaten to reduce available global supply and intensify competition among buyers in Asia and Europe.

In Iran, the steel industry and direct reduced iron (DRI) producers face significant pressure due to their heavy reliance on natural gas. Rising energy costs and potential winter supply constraints threaten to increase production costs, reduce profit margins, and impact the competitiveness of Iranian products in domestic and export markets.

To mitigate domestic shortages, Iran has focused on increasing gas production and developing fields such as South Pars. Recent reports indicate that daily raw gas production has seen increases compared to previous years, with the South Pars field reaching record production levels of approximately 730 million cubic meters per day in late 2025.