Energy Prices Under Threat Amid Ongoing Conflict

Even if the war involving Iran, often referred to as an “Armageddon” scenario by some experts, concludes soon, the damage inflicted on key facilities in Qatar could keep energy prices elevated worldwide.

The Ras Laffan facility in Qatar accounts for about 20% of the global liquefied natural gas used for electricity, heating, and cooking. Its recent damage from an Iranian attack only adds to what is already the largest energy supply disruption on record.

Anne-Sophie Corbeau, a former gas analyst at BP now with Columbia University’s Center on Global Energy Policy, shared her dismay, saying, “I woke up this morning and thought, ‘No, please don’t do this.'” This situation has long been a source of anxiety for her—something she had hoped would never occur.

Gasoline prices in Europe have surged by 30% as markets reopened, more than doubling since the war began. Meanwhile, certain gas stations in Asia have started fuel rationing just to manage shortages.

Laurent Segalen, an investment banker focused on clean energy, remarked that the coming months could spell disaster for gas importers. Joe Adamski from ProcureAbility indicated that Europe and Asia will initially feel the pinch, but the effects are expected to ripple globally, likely reaching the U.S. within two months.

“Every oil-based, every fossil fuel-based economy is global in nature, so disruptions will inevitably affect the U.S.,” Adamski noted. Analysts warn that energy shocks often translate into higher consumer prices, potentially exacerbating inflation overall.

“Oil will influence the price of everything because it underpins the economy,” Adamski explained. “It’s essential for transporting goods, producing food, and creating numerous everyday items.”

The average gas price in the U.S. has climbed to $3.91 per gallon, as reported by AAA.

On Wednesday, Federal Reserve Chair Jerome Powell indicated that rising energy costs could further fuel inflation, particularly as interest rates remain unchanged due to uncertainty surrounding the conflict with Iran.

After an Israeli strike on Iran’s South Pars gas field, Brent crude prices temporarily exceeded $119 per barrel before settling around $105. However, Tehran retaliated with attacks on significant energy infrastructure in Qatar and Saudi Arabia, alongside heightened aggression against ships in the Persian Gulf.

Israeli Prime Minister Benjamin Netanyahu has agreed to President Trump’s request to refrain from further attacks on energy facilities, but concerns linger that substantial damage has already been inflicted.

Repairing such extensive damage—especially considering the sophisticated equipment required to supercool the gas—will take considerable time, particularly as workers will not be sent to the site until safety is assured. Adamski has mentioned that Qatar estimates repairs could take up to five years.

“If hostilities persist, targeting Iranian or allied facilities, the costs could increase further,” he added.

The Ras Laffan site is vast—almost three times the area of Paris—and took three decades to construct, costing hundreds of billions of dollars. It has the capacity to cool enough gas to satisfy the annual energy needs of the UK and Italy combined.

The blockade of the Strait of Hormuz, a critical passage for 20% of the world’s oil, has already seen average gasoline prices in the U.S. reach $3.91 per gallon.

While analysts initially anticipated that gas flows from Qatar would quickly resume once the strait reopened, that expectation has proven overly optimistic.

Tom Marzek-Manser from energy consultancy Wood Mackenzie stated, “The immediate conclusion is that even after the conflict ends, normal operations in Qatar won’t restart for several weeks.”

In response to rising energy costs, the White House has announced measures including the release of oil reserves, easing certain energy sanctions on Russia, and contemplating the suspension of oil sanctions on Iran.

The International Energy Agency also revealed a historic release of 400 million barrels of oil; however, it remains clear that global reserves cannot compensate for the prolonged loss of supply.

There are also reports that the Trump administration may consider an invasion of Kharg Island, Iran’s principal energy hub, an action that would significantly escalate the situation.

“If we continue focusing on military objectives, the conflict might be manageable,” Adamski remarked, but he expressed concern over escalating conflicts involving Kharg Island, stating, “That’s my biggest worry, and we’re starting to see signs of it.”