Gas Prices Hit Three-Year High as Qatar Drone Strike Compounds Oil Crisis

The Iran conflict has expanded into a full-blown gas market crisis, with European natural gas prices surging to three-year highs after an Iranian drone strike damaged a critical Qatari LNG terminal. The disruption compounds an already severe oil price shock that has driven Brent crude past $90 a barrel — the biggest weekly gain in energy markets since the early Covid-19 pandemic period.
Qatar is one of the world’s most important suppliers of liquefied natural gas, accounting for roughly 20% of global LNG exports. The damage inflicted on its export infrastructure has sent shockwaves through European energy markets, even though the UK, for example, relies on Qatar for only around 2% of its gas supplies. The concern is less about direct dependency and more about competition: if Qatar’s LNG flows are disrupted, European buyers may have to pay higher prices to attract cargoes from alternative sources.
Qatar’s energy minister put the situation in stark terms. Even if the conflict ended today, he said, it would take weeks to months for the Gulf state to resume full LNG exports — a timeline that could force European energy companies into expensive emergency procurement ahead of next winter. The minister also warned that if the war continues, all Gulf energy exporters could halt production entirely, pushing oil to $150 a barrel.
The oil market is wrestling with its own profound difficulties. Kuwait has already begun cutting output at fields that have run out of storage space, and energy consultants estimate that Saudi Arabia and the UAE face similar constraints within 20 days. The combination of disrupted shipping lanes through the Strait of Hormuz and rapidly filling storage facilities is creating conditions that could force an unprecedented coordinated shutdown of Gulf oil production.
Financial markets have processed the week’s events with shock and alarm. UK gas market prices hit three-year highs, contributing to surging bond yields and collapsing rate cut expectations. Stocks across Asia, Europe, and the UK fell significantly. Airlines suffered particularly severe losses, and economists have begun revising upward their inflation forecasts for the coming months.