The economic effects of the airstrikes in and around Iran reverberated through natural gas markets on Monday, after Qatar’s state-owned energy company said that it would halt production of liquefied natural gas, cutting off a large share of the world’s supply of the fuel.
Natural gas prices jumped on Monday amid concerns about supplies. Qatar exports L.N.G. via the Strait of Hormuz, which is also a vital shipping channel for oil and other goods. Traffic through the strait on Iran’s southern coast has dwindled since the Iranian military warned ships not to pass through it after the airstrikes began over the weekend.
QatarEnergy said on Monday that it would stop producing L.N.G. and related products after military attacks on two of its gas sites.
The response was most immediate in Europe, where the regional benchmark price for gas surged by as much as 50 percent, to the highest in a year.
“This disruption is a significant escalation of the conflict for international energy markets,” analysts at Eurasia Group wrote in a report.
In the United States, which produces nearly all the gas it consumes, natural gas prices rose by only about 4 percent on Monday morning. Natural gas is more difficult to transport than oil because it first has to be turned into a liquid, leading to bigger differences in regional prices.
Analysts warned that prices could jump higher. If the flow of natural gas through the Hormuz Strait stopped for a month, European prices could climb 130 percent from their levels last week, analysts at Goldman Sachs said. (U.S. price increases would be limited, they wrote.)
That would push natural gas to prices last seen in 2022, after Russia’s full-scale invasion of Ukraine. Europe went on to experience a painful increase in inflation and sought alternatives to Russian gas. Since then, Europe gets much more of its natural gas via L.N.G. from the United States, and around 5 percent of its gas comes directly from the Middle East.
Most of the natural gas exported through the Strait of Hormuz is destined for Asia, particularly China, India and South Korea. A prolonged halt in these shipments would force Asian buyers to compete with Europe for gas from the United States, Australia and elsewhere, according to the Center for Strategic and International Studies.
As a result, even after Qatar restarts shipments, there would probably be “fierce competition” for gas, keeping prices elevated, said analysts at ICIS, a commodities research firm.
Europe is particularly vulnerable to higher prices because its natural gas storage levels are low. In Germany, the region’s largest gas consumer, storage levels have fallen to just 21 percent of its capacity. Across the European Union, underground gas stores are likely to end this winter at their lowest levels since at least 2022, said Natasha Fielding, the head of gas and L.N.G. pricing at Argus Media.
Warmer spring weather will reduce the immediate impact, though gas storage levels have to be maintained to avoid drops in pressure that can damage infrastructure. Analysts warn that a prolonged shutdown would make it more expensive to rebuild stocks.
“A lot depends on the scale of the disruption to flows through this key choke point,” Ms. Fielding said. “A brief halt won’t affect Europe all that much, but a lengthier one would raise concerns for how Europe will secure its gas supply next winter.”
Rebecca F. Elliott contributed reporting.
Eshe Nelson is a Times reporter based in London, covering economics and business news.
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