Hormuz Slowdown Creates Associated Gas Problem For Gulf States

6 Mar 2026 Issue: 69 / 10 By: Peter Stevenson

A prolonged Hormuz closure could have seismic second order consequences for Gulf states. One key concern is associated gas production that feeds power and water desalination plants. For Iraq, this is an imminent concern, while the likes of Saudi Arabia and UAE have more resilience.

The effective closure of the Strait of Hormuz since Israel and the US launched their attacks on Iran has huge ramifications for the Gulf states. The most obvious impact is the hit to their primary hydrocarbon export revenue streams, but a lengthy closure of the route would have profound knock-on impacts in other areas, including for the gas that feeds power and water desalination plants.

With the exception of Qatar, all the Gulf States rely to varying degrees on associated gas that is produced alongside crude oil. A lengthy closure of the export route would force producers to shut in some crude oil production as storage facilities fill up; in some cases those storage facilities are already approaching tank tops. Even if shut-ins are calibrated to ensure that those fields with the largest yields of associated gas stay online, the impact on gas availability could be severe. (CONTINUED - 1535 WORDS)