Middle East crisis: Qatar declared force majeure on gas exports

Qatar declared force majeure on gas exports on ​Wednesday amid the US-Israeli war on Iran, with sources saying it may take at least a month to ‌return to normal production volumes.

The move means global gas markets will experience shortages for weeks even in the unlikely scenario the conflict ends today, as Qatar supplies 20% of global liquefied natural gas.

• Force majeure is a clause that frees parties from ​liability if any failure to meet supply obligations is due to events beyond their control.

State energy giant Qatar Energy (QE), which stopped producing gas this week, will fully shut down gas liquefaction on ​Wednesday, two sources familiar with the matter said. They asked not to be named because they are not allowed ​to speak to the media.

QE won’t restart the facility for at least two weeks, according to ⁠initial estimates of the situation in the region, the sources said. Once the restart decision is taken, it will take another ​two weeks to turn gas into a super-chilled fuel and reach full capacity, the sources added. The company did not respond ​to a request for comment.

Qatar accounts for about 20% of global LNG exports, all of which transit the Strait of Hormuz, where shipping has ground to a near-halt amid the U.S.-Israeli war on Iran and Tehran’s retaliation.

Qatar supplies Europe and predominantly Asian markets, with over 80% of its customers in ​China, Japan, India, South Korea, Pakistan and other countries in the region.

QE has started contacting some of its clients in Asia ‌and ⁠Europe, but has not told them how long the shutdown might last, sources told Reuters.

The production halt has intensified competition between the Atlantic and Pacific basins for LNG cargoes, sending European and Asian gas prices and LNG freight rates to multi-year highs.