Qatar shut down liquefied natural gas production at the world’s largest export facility after it was targeted in an Iranian drone attack, sending European gas prices surging more than 50% and rattling global energy markets.
QatarEnergy’s Ras Laffan plant covers about a fifth of global LNG supply and the unprecedented halt now threatens energy security worldwide.
European benchmark gas futures jumped the most since the energy crisis in 2022, after QatarEnergy confirmed Monday that output had been suspended. Tankers had already largely stopped transiting the Strait of Hormuz, a critical artery for global fuel shipments.
“The threat to security of supply is here and now,” said Simone Tagliapietra, an analyst at Bruegel. “The extent of it will depend on the duration of the shutdown, but we are now into a new scenario.”
While Asian countries buy most of the LNG shipped from the Middle East, a disruption will increase competition for alternative supplies — pushing up prices worldwide, including in Europe.
European gas prices are rallying as storage inventories are unusually low, and the region needs to import large volumes of LNG this summer to refill them ahead of next winter. While the intraday surge is the biggest since Russia’s invasion of Ukraine four years ago, benchmark prices are only at a one-year high because regional supplies haven’t been directly disrupted and traders are still assessing how long the conflict will last.
The Strait of Hormuz is a key waterway for energy, carrying roughly 20% of the world’s LNG. The dramatic slowdown of traffic through the strait has created major bottlenecks potentially causing fuller storage tanks for QatarEnergy. The company has declared force majeure on its contractual obligations to deliver LNG to its customers, according to people with knowledge of the matter. So far there haven’t been any reports of damage at the facility.