QatarEnergy Halts LNG Production After Attacks
QatarEnergy, the state-owned energy company, announced it has stopped production of liquefied natural gas (LNG) following attacks on its facilities in Ras Laffan and Mesaieed. A drone strike targeted its energy facility in Ras Laffan, according to a statement from Qatar’s defence ministry, which reported no human casualties.
The company, one of the world’s largest LNG producers, stated on social media that it “values its relationships with all of its stakeholders and will continue to communicate the latest available information.”
Gas Prices Spike in Europe and UK
The Dutch day-ahead gas contract, the European benchmark, surged 41% to €45 per megawatt hour (MWh), up from €32 on Friday. Similarly, the UK’s day-ahead gas contract rose sharply by 40% to 110p a therm.
The shutdown at the world’s largest LNG export facility could lead to a loss of nearly 20% of global LNG supply, exacerbating the ongoing effects of the 2022 energy crisis. Although Qatar accounted for about 6.5% of UK LNG imports over the past year, according to energy analyst Cornwall Insight, the shutdown risks intensifying competition between Asian buyers and Europe, potentially driving prices higher across the market.
Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, commented on the price surge:
“This is a worrying sign that bills for both homes and businesses could rise again” in the UK.
Oil Prices Rise Sharply Amid Strait of Hormuz Tensions
The Middle East turmoil also caused a significant increase in oil prices. Brent crude surged by as much as 13% during early trading, reaching $82 a barrel—a 14-month high—as the effective closure of the Strait of Hormuz, a critical global trade route, heightened concerns over oil supply.
Although oil prices later eased slightly from their peak, Brent crude remained nearly 6% higher at $77 a barrel on Monday.
Global Stock Markets React to Conflict
European stock markets declined, with London’s FTSE 100 falling 1.2% to 10,780 points. IAG, the parent company of British Airways, and easyJet were among the worst performers, dropping 6% and 4% respectively, as thousands of flights were cancelled.
Conversely, the rise in crude prices boosted shares of oil companies BP and Shell by approximately 3%. Shares in defence manufacturer BAE Systems increased by 5% as investors favored defence stocks.
Other European indices also fell: Germany’s Dax dropped 2.4%, France’s CAC 40 declined 2.2%, Italy’s FTSE MIB decreased 2%, and Spain’s Ibex fell 2.6%. Wall Street opened lower as well.
In Asia, Tokyo’s Nikkei 225 fell nearly 2.4% in response to weekend developments, later moderating to a 1.4% decline. Sydney’s ASX 200 opened sharply lower but recovered to close flat. China’s Shenzhen Composite dropped 0.7%.
Gold, often considered a safe-haven asset during crises, rose 2.5% to $5,408 an ounce.
US and Israeli Military Actions Continue
Military strikes by the US and Israel against Iran showed no signs of abating. Former US President Donald Trump suggested the conflict could persist for another four weeks and stated that attacks would continue until America’s objectives are achieved.
Strait of Hormuz Under Threat
Attention focused on the Strait of Hormuz, through which about 20% of global oil supplies and seaborne gas tankers transit. Following US-Israeli strikes on Saturday, Tehran reportedly warned tankers that no ships would be permitted passage through the strait.
Two vessels have been attacked in the strait—one near Oman and another near the UAE—according to the United Kingdom Maritime Trade Operations (UKMTO), the British maritime security agency.
While Iran has not officially confirmed closure of the waterway, marine tracking data showed tankers accumulating on both sides of the strait, either wary of attacks or unable to secure insurance for passage.
The International Maritime Organization (IMO) urged vessels to avoid the Strait of Hormuz. Its secretary general, Arsenio Dominguez, expressed serious concern over reports of several seafarers wounded in attacks.
“I urge all shipping companies to exercise maximum caution,” Dominguez said. “Where possible, vessels should avoid transiting the affected region until conditions improve.”
Shipping giant Maersk announced on Sunday it was suspending passage through the Strait of Hormuz and the Suez Canal, citing safety concerns.
Some analysts warned that oil prices could surpass $100 a barrel if flows through the Strait of Hormuz are not promptly restored.
Opec+ Oil Output and Market Impact
The Opec+ cartel agreed on Sunday to increase oil output modestly by 206,000 barrels per day for April. However, much of this additional supply must still be transported from the Middle East by tanker.
Iran, a major Opec producer responsible for 4.5% of global oil supplies, means any disruption to its shipments will likely affect the broader market.
Energy consultancy Wood Mackenzie noted the dual impact of the disruption:
“The disruption creates a dual supply shock: not only are current exports through the strait halted, but Opec+ additional volumes and ultimately most of Opec’s spare capacity – typically a key lever for balancing the global oil market – are inaccessible while the waterway remains closed.”
UK Fuel Prices Expected to Rise
In the UK, the RAC reported that forecourt prices have been increasing in recent weeks and may rise further due to the conflict.
Simon Williams of the RAC stated:
“Regardless of the current situation, petrol rose by a penny a litre in February and is likely to go up by another penny in the next week or so to an average of 134p a litre. If oil were to climb to and stay at the $80 a barrel mark, then drivers could expect to pay an average of 136p for petrol. At $90, we’d be looking at over 140p a litre and $100 would take us nearer to 150p, but it’s all too soon to know.”
and AFP contributed to this report.
