Middle East war drives $25bn energy damage – Rystad Energy

The ongoing conflict in the Middle East has triggered severe disruptions across global oil and gas supply chains, with damage to key infrastructure pushing estimated repair costs to at least $25 billion, according to Rystad Energy.

The disruption spans liquefied natural gas (LNG) trains, refineries, fuel terminals and gas-to-liquids facilities, with costs expected to rise further as the full scale of damage becomes clearer. Analysts say spending will be driven largely by engineering and construction, followed by equipment and materials procurement.

A major concern is the impact on Ras Laffan Industrial City in Qatar, where the destruction of LNG trains S4 and S6 has forced a declaration of force majeure and cut production capacity by 17 percent, equivalent to about 12.8 million tonnes per annum.

However, restoring output at the facility could take up to five years, not due to funding constraints but because of global supply chain bottlenecks.

Large-frame gas turbines required for LNG operations are produced by only a handful of original equipment manufacturers (OEMs), all of which entered 2026 with production backlogs of between two and four years, driven by competing demand from data centre electrification and coal plant retirements.

Audun Martinsen, head of supply chain research at Rystad Energy, said recovery across the Gulf will depend more on structural constraints than financial capacity.

“While some assets may be restored within months, others could remain offline for years,” he said, noting that prolonged outages continue to push pre-war production capacity further out of reach.

He identified South Pars gas field in Iran and Ras Laffan as the most critical pressure points.

In Iran’s case, sanctions complicate recovery efforts by limiting access to Western technology and contractors, forcing reliance on domestic and Chinese service providers, a process that could be slower and more costly.

Elsewhere in the region, BAPCO Sitra Refinery in Bahrain suffered direct hits that damaged two crude distillation units and a tank farm, disrupting operations just months after the completion of a $7 billion modernisation programme.

The timing of the damage has compounded the impact, delaying expected revenue flows and forcing operators to remobilise contractors under higher costs and uncertain war-risk insurance conditions.

Moderate disruptions have also been reported across Saudi Arabia, United Arab Emirates, Kuwait, and Iraq, though recovery timelines vary significantly.

Analysts noted that the speed of restoration will depend heavily on the strength of domestic engineering, procurement and construction (EPC) ecosystems.

Saudi Arabia’s rapid restart at the Ras Tanura refinery highlights this advantage, as maintenance teams already on-site enabled swift recovery following limited damage.

Looking ahead, operators are expected to prioritise restoring existing production capacity over new developments, intensifying demand for EPC contractors and specialised equipment manufacturers.

In the near term, activity will focus on inspection, engineering and site preparation, before transitioning to equipment replacement and reconstruction as procurement constraints ease.

However, continued geopolitical tensions and supply chain limitations mean that full recovery across the region’s energy infrastructure could extend over several years, with implications for global energy markets and price stability.