(Bloomberg) – 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.
See also: Oil surges as Strait of Hormuz traffic nearly halts amid Middle East war
The key question for traders is how long the disruption will last. If shipping through the Strait of Hormuz were halted for a month, European gas prices could more than double, according to Goldman Sachs Group Inc.
Even if the US boosts LNG production, it’s unlikely to be enough to offset supply from Qatar in the near-term. QatarEnergy is scheduled to start its Golden Pass expansion project in the US in the coming weeks but the facility won’t be at full capacity until next year.
U.S. President Donald Trump said the bombing campaign against Iran could last for weeks. The conflict continues to deepen, with blasts heard across Israel, Saudi Arabia, Qatar and the United Arab Emirates, as states intercepted Iranian missiles launched in response to U.S.-Israeli strikes.
Israel on Saturday ordered the temporary closure of some gas-producing capacities, including its biggest Leviathan gas field. That prompted major importer Egypt to seek more LNG cargoes.
Gas trade disruptions in the Middle East could also eventually raise spot LNG demand from Turkey, according to BloombergNEF, as it imports pipeline fuel from Iran.
Dutch front-month futures, Europe’s gas benchmark, traded 46% higher at €46.77 a megawatt-hour by 2:31 p.m. in Amsterdam. That’s the highest level since February 2025.
See also: Drone strike forces shutdown of Aramco’s 550,000-bpd Ras Tanura refinery
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