According to Qatar's Energy Minister Saad al-Kaabi in an interview with the Financial Times published today, Qatar expects that all energy producers in the Gulf will stop exports within a few weeks and cause the price of oil to rise to $150 per barrel. Kaabi told the Financial Times the conflict in the Middle East could 'bring down the economies of the world'. He added that if ships were unable to proceed through the Strait of Hormuz, in two to three weeks the price of oil could soar much further to $150 a barrel.
The exact timelines for when all Gulf energy exporters might stop production or declare force majeure remain unclear. Kaabi told the newspaper: 'If this war continues for a few weeks, GDP growth around the world will be impacted. Everybody's energy price is going to go higher.
' The severity of the potential shortages of products and factory chain reactions mentioned by Kaabi is not yet known. He also said that even if the war stops immediately, Qatar will need 'weeks or months' in order to return to a normal distribution cycle. Kaabi said even if the war stopped now, it would take 'weeks to months' to resume normal output.
According to Qatar's energy minister, oil prices have jumped after he warned he expects all oil and gas exporters in the Gulf to stop production within days. 4% from the end of trading on Thursday. About a fifth of the world's oil supply is usually shipped through the Strait of Hormuz each day, but traffic through the narrow passage has all but halted since the US-Israel war with Iran began last weekend.
The current status of traffic through the Strait of Hormuz and how long it has been halted is not specified. Already consumers in places such as the UK are seeing higher fuel prices. Gas prices have also risen.
There have been concerns the current crisis could have a similar impact to Russia's invasion of Ukraine, but so far rises in the prices of oil and gas remain below the peaks experienced in 2022. This week QatarEnergy said it had stopped production of LNG following 'military attacks' on its facilities. Qatar stopped production of liquefied natural gas (LNG) on Monday, March 3, as Iran continued to launch strikes on Gulf countries in retaliation for attacks by the US and Israel.
The specific military attacks targeted Qatar's LNG facilities and who was responsible are unknown. LNG production accounts for about 20% of global supply and plays a major role in balancing demand in both Asian and European markets. Although no damage has been caused to Qatar's offshore operations, the consequences for onshore operations are still being assessed, Kaabi told the newspaper.
The extent of damage or operational impact on Qatar's onshore energy facilities is being evaluated. This week the company declared 'force majeure' - a clause freeing it from liability for failure to supply due to events outside its control - and Kaabi said he believed all other energy exporters would have to follow suit in the next few days if the war continues. 'All countries that have not declared force majeure we expect to do so in the next few days as this continues.
All exporters in the Gulf region will need to declare force majeure,' Kaabi told the FT.