Global energy chokepoints are under threat! The core LNG hub in Qatar has been attacked, and the Strait of Hormuz is effectively paralyzed. The Qatari Energy Minister issued the sternest warning: if the conflict persists for several weeks, multiple Middle Eastern nations will be forced into a complete production shutdown, potentially driving oil prices to $150 per barrel and causing natural gas prices to surge fourfold. A superstorm that could 'cripple the global economy' is looming!
The escalation of conflicts in the Middle East is pushing the global energy supply system to a critical point. The Qatari Minister of Energy has issued the most severe warning to date: if the war persists for several weeks, energy-exporting countries in the Gulf region will be forced to completely halt production, delivering profound shocks to the global economy.
As of the time of writing, $Crude Oil Futures (APR6) (CLmain.US)$ The intraday increase reached 3.37%, with a reported price of $83.74 per barrel. $Brent Last Day Financial Futures (MAY6) (BZmain.US)$ An increase of 1.55% was reported at $86.73 per barrel.
U.S. oil stocks advanced in pre-market trading, with Battalion Oil surging over 27%, U.S. Energy gaining more than 5%, and Occidental Petroleum rising over 2%.
In terms of related ETFs, $United States Oil Fund LP (USO.US)$ surged over 4% pre-market, bringing its cumulative gain for the week to over 17%.
Qatari Energy Minister Saad al-Kaabi, in an interview with the Financial Times, stated that even if hostilities cease immediately, it would take Qatar "weeks to months" to resume normal liquefied natural gas (LNG) deliveries. He predicted that should the Strait of Hormuz remain impassable, international oil prices could surge to $150 per barrel within the next two to three weeks, with natural gas prices potentially reaching $40 per million British thermal units (MMBtu), nearly four times pre-war levels.
In a previous article, Wall Street News noted that calculations by JPMorgan indicate that once the strait is fully blocked, the storage capacity of the seven major oil-producing countries in the Middle East would only last for 25 days, after which they would be compelled to shut down production entirely.
Kaabi warned that this war "will cripple economies worldwide." He anticipates that as the conflict continues, other exporters in the Gulf region that have yet to declare force majeure "will likely follow suit in the coming days." At that time, Asian buyers will compete for limited spot resources at higher prices, and the European market will also experience significant impacts.
Ras Laffan under attack, recovery timeline still unclear
On Monday, Iranian drones attacked Qatar's Ras Laffan plant, forcing QatarEnergy to declare force majeure. This facility serves as the core hub for Qatar's LNG exports.
Kaabi stated that damage assessments are still ongoing, and the timeline for repairs remains uncertain. "We do not yet know the extent of the damage; evaluations are continuing. How long the repairs will take is still unclear," he said. He also revealed that although Qatar’s offshore production facilities were not damaged, they too face the threat of attack.
"When our personnel are in danger, when we have been struck in military operations, when we cannot operate normally, and when we cannot risk our employees' lives, we have no choice but to declare force majeure," Kaabi said.
Moreover, Qatar’s $30 billion expansion project, aimed at increasing annual capacity from 77 million tons to 126 million tons at the North Field by 2027, will also experience delays, with the first phase of capacity commissioning originally planned for the third quarter of this year now postponed. "This will certainly delay all our expansion plans," he said. "If operations resume within a week, the impact might still be manageable; however, if it drags on for one or two months, the situation will be drastically different."
The Strait of Hormuz has effectively come to a standstill.
Approximately one-fifth of the world's oil and natural gas is transported through the Strait of Hormuz. However, since the attacks by the United States and Israel on Iran last Saturday, shipping in this strategic waterway has nearly halted. Reports indicate that at least 10 vessels have been attacked, insurance rates have surged sharply, and shipowners are generally hesitant to send vessels and crews through the strait.
Trump stated that the U.S. Navy would provide escort services for passing vessels and offer additional insurance guarantees to shipping companies. However, Kaabi remains pessimistic. "Given the current pattern of attacks, sending vessels into the strait... is too dangerous. Being so close to the Iranian coastline makes it impossible to persuade shipowners to take the risk," he said. "Most shipowners will realize they will become larger targets since Iran has already been attacking warships."
At its narrowest point, the Strait of Hormuz is only 24 nautical miles wide and runs adjacent to the Iranian coastline. Kaabi noted that as long as the conflict persists, there will be no safe passage for commercial vessels through the strait.
Even after resuming operations, significant logistical challenges remain.
Even if the fighting stops and production restarts, restoring normal delivery schedules will not be easy. Kaabi pointed out that while Qatar owns 128 LNG carriers, only six or seven are currently on standby, with the rest dispersed across various locations worldwide.
"Loading each vessel takes one to two days, and only six or seven can be loaded simultaneously," he explained. This is the fundamental reason why the restoration of deliveries will take a considerable amount of time.
Qatar also has no alternative when it comes to replenishing the market. Kaabi stated that there simply isn't enough spot LNG available in the market for alternative procurement. "Suppose you want to buy 77 million tons to resell to your customers. You won't find such a large volume available in the market," he said.
Potential chain reaction of economic impacts
Kaabi's warning extends far beyond the energy market itself. He emphasized that any disruption to trade in the Strait of Hormuz would have ripple effects across multiple industrial chains, as the region produces a significant portion of the world’s petrochemicals and fertilizer raw materials.
"If this war continues for several weeks, global GDP growth will be affected. Everyone’s energy costs will rise, some products will face shortages, and factory supply chains will experience ripple effects," he said.
As for the European market, although Qatar’s exports to Europe account for a relatively small share, Kaabi noted that Europe will still face significant impacts—European buyers will encounter heightened bidding pressure as Asian buyers compete at higher prices for limited spot supplies.
Responding to external doubts that this production halt could damage Qatar’s reputation as the most reliable LNG supplier, Kaabi dismissed such claims. "I don’t think anyone would blame you for being unreliable if you fail to deliver under bombardment," he said.
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