Why QatarEnergy's LNG production halt could shake up global gas markets

"QatarEnergy has suspended liquefied natural gas (LNG) production following a drone attack, straining the global LNG market. On Monday, Iranian drones struck two sites, according to Qatar's Ministry of Defence: a water tank at a power plant in Mesaieed Industrial City and an energy facility in Ras Laffan belonging to QatarEnergy, the world's largest LNG producer."

"Qatar's LNG exports represent 20 percent of the global market. With fewer products reaching the market, LNG supply is down, causing prices to surge. Definitely an escalation overnight with pressure on energy infra in the Gulf, said Rachel Ziemba, a senior fellow at the Center for a New American Security, a think tank."

"This comes at a time when intensifying sea battles between Iran and the United States, coupled with missiles flying over the region, have effectively choked the Strait of Hormuz, a strategic trade route. At least 150 vessels have dropped anchor, including those carrying LNG, in the strait and surrounding areas, according to Reuters. Traffic in the strait for both LNG and oil has declined by 86 percent."

Iranian drones attacked two QatarEnergy sites in Qatar, including the Ras Laffan complex, forcing the world's largest LNG producer to suspend operations and declare force majeure. Qatar supplies 20 percent of global LNG, making this disruption significant for international energy markets. Simultaneously, escalating tensions between Iran and the United States have effectively blocked the Strait of Hormuz, a critical trade route, with traffic declining 86 percent and approximately 700 ships idled. At least 150 vessels carrying LNG are anchored in the strait and surrounding areas. With reduced LNG supply reaching markets, prices surge dramatically. Asian markets, particularly Bangladesh, face the most direct impact from this supply disruption.

Read at www.aljazeera.com