By Maha El Dahan, Andrew Mills and Yousef Saba
March 19 (Reuters) – Natural gas prices in Europe surged as much as 35% on Thursday as Iranian and Israeli strikes targeted some of the Middle East’s most important gas infrastructure, doing damage that will likely take years to repair.
The strikes on energy facilities since the onset of the U.S. and Israeli war on Iran have brought to life some of the energy industry’s worst fears – that a conflict in the region will leave long-term damage and shortages in global energy supplies.
“We are now well on the road to the doomsday gas-crisis scenario,” said Saul Kavonic, an energy analyst at MST Financial. “Even once the war ends, the disruption to LNG supply could last for months or even years.”
Iran on Thursday struck the Ras Laffan liquefied natural gas facility in Qatar, the world’s largest LNG complex, a day after Israel attacked Iran’s huge South Pars gas facilities.
The hit on Ras Laffan destroyed two LNG trains that could cause a reduction of around 17% of Qatar’s liquefied natural gas exports for between three and five years.
“I never in my wildest dreams would have thought that Qatar would be – Qatar and the region – in such an attack, especially from a brotherly Muslim country in the month of Ramadan, attacking us in this way,” QatarEnergy CEO Saad al-Kaabi told Reuters.
He said the state-owned gas company may have to declare force majeure on long-term contracts to Belgium, China, Italy and South Korea.
Gas prices in Europe rose by as much as 35% on Thursday and oil jumped as much as 10%, before paring gains.
SHARP ESCALATION IN THE CONFLICT
Analysts say Israel’s attack on South Pars and the retaliatory strike on the Ras Laffan plant represent a sharp escalation in the conflict.
Aerial attacks by Iran have already targeted a refinery in Saudi Arabia, forced the United Arab Emirates to shut gas facilities, and started fires at two Kuwaiti refineries. U.S. President Donald Trump threatened retaliation if they persisted.
“This latest escalation feels like a turning point for markets because the conflict is no longer just about military headlines or Strait of Hormuz closure,” said Charu Chanana, chief investment strategist at Saxo in Singapore, referring to the closure of a key waterway bordering Iran’s coast through which a fifth of the world’s crude oil and liquefied natural gas normally flows.
“It is now hitting the plumbing of the global energy system. What is unsettling markets now is the growing stagflation risk,” she added.
