In the escalating tensions gripping the Middle East, Qatar’s Energy Minister Saad Al-Kaabi has issued a stark warning that could reshape global energy markets. Speaking to the Financial Times, Al-Kaabi revealed that Gulf energy exporters might soon declare force majeure if the ongoing conflict persists just a few more days. This legal maneuver would halt oil and gas shipments without breaching contracts, potentially triggering a massive surge in worldwide energy prices.
Force majeure clauses are lifelines for oil companies facing wars or disasters. They excuse non-delivery without penalties. Al-Kaabi emphasized that all regional exporters could invoke this soon, warning that companies ignoring it risk severe legal and financial fallout.
The minister painted a dire picture: if tankers can’t navigate the Strait of Hormuz, crude oil prices could skyrocket to $150 per barrel within two to three weeks. Natural gas prices might quadruple to $40 per MMBtu. This comes amid this week’s frenzy, with Brent crude futures jumping nearly 20% and West Texas Intermediate (WTI) surging 25%. By Friday, Brent traded above $89 per barrel, up over 3%, while WTI hit $86, up more than 5%—their highest since April 2024.
Qatar, the world’s second-largest LNG producer, has already declared force majeure after Iranian drone strikes damaged its massive Ras Laffan LNG plant. Damage assessments are underway, but recovery could take weeks to months even if attacks cease. Logistics are crippled: of 128 LNG carriers, only six or seven are available for cargo loading.
Regional attacks have hit at least 10 vessels, spiking insurance premiums and deterring shipping firms. Iran’s missile and drone barrages, including on a Bahrain oil refinery, have fueled the oil price rally. DBS Bank’s latest report flags risks from potential mines in the Strait of Hormuz, which could slow shipments, inflate insurance and shipping costs, and push energy prices even higher.
As the world watches this powder keg, the ripple effects threaten economies everywhere. Energy security hangs by a thread, with no quick fix in sight.