The Iran War Is Pushing the Global Gas Trade into the Shadows

A day before crossing the Strait of Hormuz, an Indonesian seafarer aboard the Al Rayyan tanker published a picture of a rainbow cutting across the bow. “When the dream ship becomes reality,” he wrote on social media, thanking God for the blessing. Then the liquefied natural gas carrier switched off its transponder and began to move out of the Persian Gulf.

The Al Rayyan, loaded with Qatari LNG, tailed another gas carrier coming from the emirate, the Fuwairit, which was preparing to cross the waterway under a deal between Pakistan and Iran. For the seafarers in the second vessel, who had no such government protection, it was a safety beacon through a treacherous corridor, mariners recounted later.

They slowly entered Iranian-controlled waters, scanning the horizon for other tankers, Iranian patrol boats and incoming drones. There was silence. Then the first ship’s signal also disappeared. Some of the crew prayed.

A day later, the two reemerged from their dark crossing, in the Gulf of Oman. After months of waiting, both carriers set off to the east.

When US and Israeli strikes on Iran began in late February, Qatar was among the first producers to find itself caught in the economic crossfire. Its giant LNG plant and a fleet of tankers—including some of the most expensive vessels in the world—were suddenly cut off.

As the war enters its fourth month, Hormuz remains in Iran’s grip. Yet the world’s second-largest LNG exporter has once again been moving cargoes out of the Persian Gulf, thanks to hiring and navigating practices that owe more to shadowy corners of the oil market than to LNG, a far smaller and more conservative industry, where buyers’ ability to track cargoes from port to port was part of a reputation for reliability.

“This is a battle for the freedom of navigation,” said Michelle Wiese Bockmann, analyst at maritime intelligence firm Windward. “You look at all those chokepoints, and all of a sudden the foundation of seaborne international global trade just goes out the window. We are seeing the increase in dark transits and the escalation of risk.”

In May alone, at least four of Qatar’s vessels appear to have now unobtrusively crossed the waterway, according to ship-tracking data and people familiar with the matter. That’s a small fraction of pre-war volumes, but a welcome relief for buyers like India and Bangladesh, who have had to tap the spot market for the lost supply, paying double the price of a Qatari cargo. The same number have been quietly sent through by the neighboring Abu Dhabi National Oil Co., known as Adnoc.

The shift to dark transits is first and foremost about limiting risks to vessels and crews crossing Hormuz — those will remain heightened until a permanent settlement is reached — but it speaks to the political and financial pressures bearing down on producers like Qatar and its neighbors. It also comes with potentially lasting consequences for the LNG trade, which is becoming less transparent at a time when consumers in Asia are already asking questions about the future of a fuel that has had two supply crises in just over four years.

This account of the changing LNG flows in the Persian Gulf is based on more than a dozen interviews with brokers working in the region, company and government officials, seafarers and analysts, all of whom spoke on condition of anonymity, given the sensitivity of the issue. They reveal a push by exporters to adapt to an unprecedented energy crisis, and the impact on those who depend on the trade.

Adnoc and QatarEnergy did not respond to requests for comment.

The first hint of change in LNG — once entirely traceable, thanks to the specialized nature of its vessels and terminals — came in 2023, as US sanctions began to hit Russia’s gas export industry.

Moscow, desperate to move shipments from its flagship Arctic LNG 2 project, built a parallel fleet of vessels, following the oil industry playbook to serve the world’s biggest market: China.

Neither Qatar nor Abu Dhabi are sanctioned or involved in the sanctioned trade. But what they have taken from the Russian experience is dark-fleet navigation as a workaround in a pinch. That’s despite International Maritime Organization requirements that demand AIS transponders, especially in narrow and congested lanes.

“It’s natural for gulf LNG producers to try and evade Iranian attacks, and adopt shadow fleet practices in the process,” said Saul Kavonic, senior energy analyst at MST Marquee. “This could persist for as long as Iran continues to try control and threaten passage through the Strait, which could last beyond any peace deal.”

Qatar last month began to ask chartered or owned tankers to switch off transponders around Ras Laffan, the world’s largest LNG export terminal, and to do the same when attempting to cross into or out of the Persian Gulf, people familiar with the matter said. Vessels are also being asked to cross as a pair, in a mini caravan, for additional safety, they said.

Meanwhile, captains and teams who are unwilling or unable to navigate the waterway are simply swapped out, the people said. In a major change, experience is not always required of those stepping in to fill the breach.

Take the Al Rayyan, owned by QatarEnergy, according to shipping database Equasis. Bloomberg ship-tracking data going back to late 2016 suggests that for the past decade it has only served Ras Laffan. Since February, it has unwittingly found itself at the heart of historic crisis.

The vessel was docked near the Qatari facility when Iranian missiles struck in March, forcing an emergency evacuation and pushing the ship into open water. Several of the Filipino crew — more than 20 seafarers in total — recalled late-night alarms blaring as they scrambled.

“You can never imagine it unless you’ve seen it with your own eyes,” one of the Filipino seafarers posted on social media, along with a picture of the massive Ras Laffan facility engulfed with flames following the Iranian attack. “Just 1 hour after we left, bigger explosions happened, attacks continued for 3 hours. Our vessel was the last to leave the port.”

The crew described being thanked with comforts like Toblerone chocolate. Most still demanded repatriation and left soon after.

Seafarers for giant LNG ships like the Al Rayyan — two and a half times the length of an American football field and worth hundreds of millions of dollars — are typically highly specialized, given the technical nature of the ships and the super-cooled cargo. But to replace this team, time was everything. The recruiter offered double pay and demanded no direct LNG expertise.

Applicants were assembled by Captain David B. Sihombing, whose recruitment firm Savana Charta has assembled Indonesian crews for at least two ships hauling sanctioned LNG to China, and eventually narrowed to 25 recruits. They crowded into a small Jakarta office early last month to be briefed on the perils of deployment, from drone strikes and collisions to the more prosaic risk of being stranded at sea for months.

Mission orders were clear: if sent through Hormuz, the tanker would need to disappear from public view to avoid becoming a target.

The practice has already had consequences for some of the most desperate buyers.

Back in early May, Pakistan secured Iran’s approval to receive a Qatar cargo, a much-needed delivery for a country struggling with power shortages and in urgent need of LNG to curb rolling blackouts. One tanker, the Mihzem, was cleared to transit.

But as it approached Hormuz on May 11, the Mihzem abruptly turned back and disappeared from ship-tracking systems. Officials in Islamabad were left scrambling to arrange contingency supplies, including on the costly spot market—only to discover the U-turn had been a distraction. Hours later, a Pakistani official received a call from a seafarer aboard the vessel confirming it had safely passed Hormuz. Shortly afterward, the signal reappeared, followed by word from Qatar that the cargo would arrive that week.

Qatar is not alone in its embrace of dark transits. Early in the conflict, Adnoc pressed vessels to keep AIS systems on, allowing them to be easily tracked. The ships’ captains pushed back—arguing instead in favor of following some in the oil trade and crossing without notifying other vessels or maritime authorities. With dark shipments, they argued, the company did not have to clear movements with Tehran, a requirement imposed by Iranian forces.

Adnoc eventually acquiesced. Under its current process, aimed in part at keeping its Das Island export plant functioning, captains of ships heading into the Persian Gulf are asked to first stop at Khor Fakkan anchorage, east of Hormuz. There, the ship will anchor — and then turn off its AIS system.

For the new crew of the Al Rayyan, the orders to sail came after the successful crossing of the Mihzem. The tanker would transit completely dark, the crew were told. It had not paid a toll, according to seafarers and traders briefed on its movements, and was also not covered by an Iran deal — but it would be paired with a vessel shielded by a diplomatic agreement, the Fuwairit, and would be bound for China, Qatar’s top customer.

If under attack, the instructions were simple: take cover and turn back.

Seafarers later recalled the moment that the ship emerged safely from the eastern side of Hormuz. Relief spread through the crew, all of whom had feared Tehran would order them back. Only once the vessel was north of Muscat, safely past the Iranian navy, did the Al Rayyan switch its tracking systems back on.

On May 23, the tanker set off from the Gulf of Oman for China, the first Qatari LNG cargo to make that journey since the war began. Back in Jakarta, the recruiters at Savana Charta were already searching for the next volunteers.

Top photo: USS Abraham Lincoln conducts U.S. blockade operations related to the Strait of Hormuz in the Arabian Sea on April 16. Source: U.S. Navy/Getty Images. Bloomberg.