The global gas market was jolted after Middle East hostilities directly hit liquefied natural gas (LNG) facilities, a linchpin of the global energy supply chain. When Qatar, one of the world's largest LNG exporters, fully halted operations at its production facilities after an Iranian drone attack, gas prices in Europe and Asia spiked nearly 50% intraday.
QatarEnergy (QE), Qatar's state-owned energy corporations, said on the 2nd (local time) that LNG production facilities in the northern Ras Laffan and Mesaieed industrial zones were hit by Iranian drones and shut down. The Ministry of National Defense said two drones launched from Iran struck the facilities but there were no casualties. The attack is seen as Iran's retaliation for the death of its supreme leader in U.S. and Israeli airstrikes.
Qatar is a key supplier, providing about 20% of global LNG supply. Most Qatari LNG is transported through the Strait of Hormuz, and the latest crisis has put both production and shipping at risk. QatarEnergy is reportedly set to declare "force majeure" on LNG loadings soon.
Markets reacted immediately. The Dutch TTF futures, Europe's natural gas benchmark, surged intraday to 47.44 euros per megawatt-hour (MWh), up as much as 48% from the previous session. It was the biggest one-day gain in about four years since Russia's invasion of Ukraine in 2022. Asia's LNG spot price (JKM) also rose about 39% to $15.068 per million BTU, reflecting supply jitters.
Energy experts warned that if disruptions to Qatari supply drag on, the shock could be worse than during the 2022 energy crisis. Goldman Sachs, in particular, said that if shipments through the Strait of Hormuz are halted for a month, European gas prices could more than double from current levels. To make matters worse, with major global insurers set to suspend war-risk coverage for vessels entering the Gulf starting on the 5th, the logistics crunch is expected to intensify further.
Meanwhile, the crisis is shaking the broader global energy market in tandem with the strike on Saudi Arabia's refining facilities and news that Israel has halted operations at key gas fields. The Korean government is monitoring the Middle East around the clock, closely watching how energy supply and price swings could affect the domestic economy and strengthening its emergency response posture.