How QatarEnergy's LNG halt is reshaping global gas markets
According to reports from Reuters and Bloomberg News, QatarEnergy was “forced to declare what is known as force majeure” due to the extraordinary circumstances of the drone attacks. The company halted production at the affected sites for security reasons
QatarEnergy's decision on 2 March 2026, to suspend liquefied natural gas (LNG) production following Iranian drone attacks has sent ripples through global energy markets, underscoring the vulnerability of supply chains concentrated in the Gulf.
Below is what happened and why it matters.
What triggered the halt?
Keep updated, follow The Business Standard's Google news channel
Qatar's Ministry of Defence confirmed that "Iranian drones struck two sites... a water tank at a power plant in Mesaieed Industrial City and an energy facility in Ras Laffan." No casualties were reported, sasy Al Jazeera.
According to reports from Reuters and Bloomberg News, QatarEnergy was "forced to declare what is known as force majeure" due to the extraordinary circumstances of the drone attacks. The company halted production at the affected sites for security reasons.
Why does Qatar matter so much?
Qatar supplies around 20 percent of the world's LNG. That makes it one of the largest players in the global gas trade.
Rachel Ziemba, a senior fellow at the Center for a New American Security, described the situation as "definitely an escalation overnight with pressure on energy infra in the Gulf." She added that it is "not good if Qatar stays offline for long, of course," though she noted a "silver lining" for the West: "At least the worst of the winter in Europe may be behind."
When such a large share of supply is removed, buyers must compete for a smaller pool of available cargoes, driving up prices and intensifying market volatility.
What has happened to prices?
The market reaction was immediate:
Europe: Benchmark wholesale gas prices in the Netherlands and Britain rose by nearly 50 percent on the day of the announcement.
Asia: Benchmark Asian LNG prices climbed by about 39 percent.
Maksim Sonin, an energy expert at Stanford University's Center for Fuels of the Future, said: "We will see near-term volatility in the LNG market, especially if infrastructure in Qatar and other hubs is damaged." He added: "I do not expect the 2022 gas crisis to repeat in Europe," referring to the shortages following Russia's invasion of Ukraine.
How is the Strait of Hormuz involved?
The halt coincides with escalating military tensions between Iran and the US that have disrupted traffic through the Strait of Hormuz, a key artery for global energy trade.
The IRGC (Islamic Revolutionary Guard Corps) announced that "the vital Strait of Hormuz waterway is now 'closed'." Traffic through the strait has fallen by 86 percent, leaving roughly 700 vessels idle on either side. Even if production resumes quickly, these transit constraints could further tighten supply.
Which regions are most exposed?
Asia
Asia receives 82 percent of QatarEnergy's LNG sales, making it particularly vulnerable.
Bangladesh, India, and Pakistan are expected to be among the most directly affected markets.
China, while the world's largest natural gas importer, sources about 34 percent of its imports from Australia, providing some diversification.
For South Asian buyers that rely heavily on spot cargoes, higher prices may translate into increased import bills and potential pressure on domestic energy supplies.
Europe
Europe is also facing higher prices, though some experts see mitigating factors. The European Commission said the EU's gas coordination group will meet on Wednesday "to assess the impact of the widening conflict in the Middle East."
Ziemba noted that a partial silver lining for Europe is that "at least the worst of the winter in Europe may be behind," potentially limiting immediate heating demand stress.
Regional security context
Saudi authorities reported that "two drones hit US Embassy in Riyadh, causing minor damage," highlighting wider regional tensions that could further affect energy infrastructure and market confidence.
Is this a repeat of 2022?
Experts anticipate near-term volatility but do not yet expect a full-scale repeat of the 2022 energy crisis unless Qatari infrastructure suffers extensive damage or the outage is prolonged.
"The longer Qatar's facilities remain offline — and the longer disruptions in the Strait of Hormuz persist — the greater the risk of sustained price increases and broader economic impact," Sonin said.
For now, markets are adjusting to a scenario in which a major supplier is offline, a key transit route is constrained, and buyers worldwide are recalculating how to secure fuel in a tighter global system.
