Qatar warns of global economic collapse as conflict with Iran intensifies

Qatar’s Minister of State for Energy Affairs, Saad al-Kaabi, has warned that the ongoing conflict in West Asia could push global economies toward a precipice, according to comments made to the Financial Times.

Kaabi stated that while not all parties in the region have yet declared force majeure, QatarEnergy has taken that step.

Pointing out that other exporters in the Gulf might adopt similar measures should the conflict persist, Kaabi noted that he expects every exporter in the region to declare force majeure if the situation continues for several more days.

Operations suspended at Ras Laffan facilities

Following a drone strike by Iran on the Ras Laffan facility, Kaabi confirmed that operations at the hub for Qatar’s liquefied natural gas (LNG) have been disrupted. He stated that even if the conflict were to end immediately, it would take weeks or even months for Qatar to return to its normal shipment cycle.

Qatar, the world’s second-largest LNG producer, was forced to declare force majeure this week following the attack.

Kaabi, who also serves as the CEO of QatarEnergy, emphasized that the company had no choice but to take this decision.

“We received intelligence from military units regarding an imminent threat to the facilities. We halted operations safely and evacuated approximately 9,000 personnel within 24 hours,” the minister said. “We cannot put our staff at risk while they are in a military zone under attack. Consequently, we declared force majeure.”

Cessation of conflict a prerequisite for production

Kaabi stated that production can only resume once the conflict has ended entirely. He noted that they are awaiting confirmation from the military that hostilities have fully ceased and that the facilities no longer face an imminent risk of attack.

This situation will also affect Qatar’s $30 billion North Field expansion project. The project, which aims to increase production capacity from 77 million tons to 126 million tons annually by 2027 and was scheduled to begin initial production in the third quarter, is now expected to face delays.

Oil prices projected to reach $150

Warning that a rise in energy prices is inevitable if the conflict drags on, Kaabi cautioned that if passage through the Strait of Hormuz cannot be secured, oil prices could reach $150 per barrel.

Ship traffic through the strait, which handles 20% of the world’s oil and gas, has effectively ceased following operations by the US and Israel against Iran. Reports indicate that at least 10 vessels have been attacked, insurance costs have surged, and shipowners are unwilling to expose their crews to the risk.

Kaabi stated that safe passage is currently unattainable due to the 24-mile-wide strait’s proximity to the Iranian coast. “Given the current nature of the attacks, sending vessels into the strait is extremely dangerous,” he said. “Iran is targeting military vessels, and shipowners see themselves as direct targets.”

He added that the proposal by US President Donald Trump for US naval escorts and supplementary insurance is insufficient to initiate safe passage.

Warning of a chain reaction in the global economy

Stating that the interruption in energy exports will affect not only energy markets but the global economy at large, Kaabi warned, “If the conflicts persist for a few more weeks, economic growth will contract worldwide.”

“Energy prices will rise, shortages will occur in certain products, and a chain reaction will ensue because factories cannot secure supply,” he said.

Kaabi emphasized that beyond energy, trade between the Gulf and the rest of the world could grind to a halt, creating serious repercussions for both Gulf economies and nations that trade with the region. The region accounts for a significant portion of global petrochemical production and fertilizer raw materials.

Logistical challenges to persist

Kaabi stated that while there is no damage to Qatar’s offshore energy facilities, the condition of the onshore facilities is still being assessed. He indicated that it is not yet clear how long the repair process will take.

The minister noted that even if production restarts, logistical challenges will persist. Kaabi reported that of Qatar’s fleet of 128 tankers, only six or seven are currently ready, emphasizing that loading each vessel takes one to two days and that capacity remains limited.