LNG, Gas Prices and Urea in 2026 — How the Gulf Shock Reached Fertiliser

The LNG wave that was meant to arrive

In January the IEA forecast that global LNG production would rise by more than 7%, or over 40 bcm, in 2026, the fastest growth since 2019. It expected the US, Canada and Mexico to account for more than 85% of the increase ^[1]. The projects driving that growth included Plaquemines, Corpus Christi Stage 3, Golden Pass and LNG Canada in North America, as well as Qatar's North Field East, then due in the second half of 2026 ^[2].

Much of the North American capacity has arrived. According to the Oxford Institute for Energy Studies (OIES), the Corpus Christi expansion was completed in August 2026, Golden Pass started up in the second quarter, and Plaquemines and LNG Canada continue to ramp up ^[7]. North American exports reached 47.3 bcm in the third quarter, 22% higher than a year earlier ^[7]. LNG Canada's second phase took a final investment decision on 28 September ^[7].

Qatar's outage and the arithmetic of 2026

The Gulf removed most of these gains. In 2025 just over 112 bcm of LNG, about 19% of global LNG trade, passed through Hormuz ^[4], including about 93% of Qatar's LNG exports ^[5]. QatarEnergy halted LNG production on 2 March and downstream output, including urea, the following day, after attacks on its Ras Laffan and Mesaieed industrial cities ^[3]. The IEA says Qatari and Emirati LNG supply fell by more than 300 million cubic metres a day from 1 March ^[5].

The IEA's July Gas Market Report forecast a fall of about 45%, or 54 bcm, in combined Qatari and Emirati supply in 2026. New projects in North America, Africa and Australia were expected to add close to 50 bcm. As a result, global LNG supply would be "broadly flat", and the IEA warned that any delay in the recovery of Gulf exports risked tipping the market into its first annual decline ^[6], which would be the first since 2012 ^[16].

Third-quarter data point that way. OIES puts global LNG supply at 127.7 bcm in the quarter, against 135 bcm a year earlier. A 20.8 bcm year-on-year fall in Qatari supply was only partly offset by a 13.5 bcm rise elsewhere ^[7]. Qatar extended force majeure in late September, with cancellations reported through November ^[8]. OIES now expects the first North Field East train in the first half of 2027 and reports that Ras Laffan repairs could take three years ^[7].

Prices: Europe and Asia compete for scarce cargoes

Benchmarks have risen in stages. In the second quarter TTF averaged close to $16/MBtu, up 32% year on year, and both TTF and Asia's JKM recorded their highest second-quarter averages since 2022 ^[6]. OIES reports that TTF reached about $28/MBtu (€83.53/MWh) in mid-September, while Asian prices rose from about $15/MBtu at the start of the third quarter to about $25/MBtu by its end ^[7].

Europe enters winter with less gas in storage than usual. On 26 October the front-month TTF contract rose to as much as €95.73/MWh, its highest since 2022, with EU storage at 74.62% on 25 October against a five-year average of about 86% ^[9]. OIES notes that the 1 November target of 75% may be missed, and it expects stocks to be low at the end of winter ^[7].

Urea: from gas shock to fertiliser shock

The fertiliser link is direct. More than 30% of global urea trade and about 20% of ammonia trade moves through Hormuz ^[5]. Argus estimates that the Middle East supplies about 20 million t/yr of urea, close to a third of global exports. The closure left more than 800,000 t stranded in the Gulf, and Iranian plant outages reduced supply further ^[10]. Qatar's QAFCO, described as the world's largest single-site urea exporter, has been offline since 4 March ^[11].

Prices reacted quickly. The World Bank reported urea above $850/t in April, up 80% since February ^[12], while Argus put prices at nearly $780/t fob by mid-April ^[10]. Demand destruction and expectations of Chinese exports then pushed prices down to around $330/t fob ^[10]. The World Bank's East European urea series averaged $693.5/t in the second quarter and fell to $390/t in August, against a 2025 average of $422.7/t ^[13].

Gas costs are now pushing in the other direction. The IEA reports that high gas prices are reducing ammonia and urea output in Asia and Europe, and that lower LNG availability has cut production in Bangladesh, India and Pakistan ^[6]. By late September, Middle East granular urea was quoted at $470–480/t fob, Brazilian CFR prices were approaching $500/t, and up to 600,000 t of urea was reportedly waiting on vessels to pass Hormuz ^[15].

China's export policy: the swing factor

China banned exports of many fertiliser categories in March to protect domestic farmers ^[14]. In late May it issued urea export quotas to producers. Profercy put the allocation at 1.5–1.6 million t for June to August, with minimum prices of $660/t fob for prilled and $670/t fob for granular urea ^[17]. Reuters reported a similar volume but could not verify it ^[14]. For comparison, China exported 4.9 million t of urea in 2025 ^[14].

Argus called China "the key swing factor" for the outlook ^[10]. In September a third tranche of 1 million t was reportedly confirmed, Chinese prilled urea was offered at around $370/t fob, and a tender by India's RCF drew about 1.6 million t of nominations, mostly from China ^[15].

EU policy: tariffs, CBAM and Russian supply

The EU is pursuing two policies at once: reducing its reliance on Russian fertiliser while trying to limit costs for farmers.

• Russian and Belarusian fertilisers: From 1 July 2026, nitrogen fertilisers from Russia and Belarus face a specific duty of €60/t on top of the 6.5% ad valorem duty, up from €40/t ^[18]. The schedule rises to €80/t from July 2027 and €315/t from July 2028 ^[19].
• Tariff suspension for other origins: On 22 May the Council suspended tariffs of 5.5–6.5% on key nitrogen fertilisers, including urea and ammonia, for one year. The suspension excludes Russia and Belarus, and the EU imported 5.9 million t of urea in 2024 ^[20].
• CBAM: The Carbon Border Adjustment Mechanism came fully into force on 1 January 2026 and covers nitrogen fertilisers ^[21]. In March EU Commissioner Christophe Hansen said the Commission had "no plans to exempt fertilizers from the CBAM" ^[22].

Outlook

The outlook for gas and urea depends mainly on when Gulf exports recover. OIES sees bleak prospects for a Gulf LNG restart before the US midterm elections at the earliest. It dates the EU ban on Russian LNG imports to 1 January 2027 ^[7]. For urea, the main variables are the pace of Chinese export quotas, the Indian tender cycle and European gas prices over the winter. Until Qatari LNG and Gulf fertiliser exports return, the 2026 LNG wave will mainly offset lost Gulf supply rather than add to global availability.

Alupetra follows LNG and urea markets from its offices in Istanbul, London and Dubai.