New Delhi, March 6: Amid the ongoing conflict in the Middle East, Qatar’s Energy Minister, Saad Al-Kaabi, has issued a warning that if the fighting continues for several more days, energy exporters in the Gulf region may need to declare ‘force majeure.’ This could lead to disruptions in oil and gas supplies and a significant spike in global energy prices.
Force majeure allows oil companies to avoid liability for contract breaches due to war or natural disasters that prevent them from delivering oil. In an interview with the Financial Times, Al-Kaabi stated that if the current situation persists, all exporters in the Gulf region may have to declare force majeure in the coming days. Companies that fail to do so could face substantial legal liabilities and losses.
He cautioned that if tankers and other vessels are unable to pass through the strait, crude oil prices could soar to $150 per barrel within the next two to three weeks. Meanwhile, natural gas prices could quadruple to $40 per MMBtu (metric million British thermal units).
This week, Brent crude futures surged nearly 20%, while West Texas Intermediate (WTI) jumped about 25%. On Friday, Brent crude traded over $89 per barrel, up more than 3%, while WTI exceeded $86 per barrel, rising over 5%. Both benchmarks are at their highest levels since April 2024.
Qatar, the world’s second-largest LNG producer, has already declared force majeure this week after its Ras Laffan LNG plant sustained damage from an Iranian drone attack. This facility is Qatar’s largest LNG plant, and assessments of the damage are currently underway.
The energy minister noted that even if the attacks cease immediately, it could take weeks to months for export operations to return to normal due to significant logistical challenges. Currently, only six or seven of Qatar’s 128 LNG carriers are available to load cargo.
Reports indicate that at least ten vessels in the region have been attacked, leading insurance companies to raise premiums significantly. Consequently, shipping companies are hesitant to dispatch vessels from the area.
Meanwhile, oil prices have surged following missile and drone attacks by Iran in the Gulf region, which have also targeted a refinery in Bahrain.
A recent report from DBS Bank warns that while Iranian naval vessels may not pose a direct threat, mines in the Strait of Hormuz could slow shipments. This could further increase insurance, shipping costs, and energy prices.
Leave a Comment