Warning from Qatar: The continuation of the war with Iran could collapse world economies
Qatar Energy Minister Saad al-Kaabi warned that if the conflicts in the region continue, there may be a serious contraction in the world economy. Qatar, which stopped shipments by declaring a force majeure, predicts that it will take weeks for logistics operations to normalize.
Qatar's Energy Minister Saad al-Kaabi told the Financial Times that conflicts in West Asia could put world economies at serious risk.
Kaabi stated that not all parties in the region have yet declared a force majeure, but QatarEnergy has taken this step.
Pointing out that other exporters in the Gulf may take a similar decision if the conflicts are prolonged, Kaabi said that if the situation continues for a few more days, he expects every exporter in the region to declare a force majeure.
Operations stopped at Ras Laffan facilities
Stating that the activities in the facility, which is the center of Qatar's liquefied natural gas (LNG) operations, were disrupted after the unmanned aerial vehicle attack on Iran's Ras Laffan facility, Kaabi stated that it would take weeks or even months for Qatar to return to the normal shipping cycle even if the fighting end immediately.
Qatar, the world's second largest LNG manufacturer, had to declare force majeure this week after the attack.
Kaabi, who is also the CEO of QatarEnergy, emphasized that the company has no choice but to make this decision.
The Minister said, "It was reported from the military units that there was an immediate threat to the facilities. We safely stopped the operations and evacuated about 9 thousand personnel within 24 hours. We cannot put our personnel at risk when they are in danger and under attack in a military zone. For this reason, we declared a force majeure" he said.
Conflicts must stop for production
Kaabi stated that production can only resume when the conflicts are completely over. The minister stated that they expect confirmation from the army that the clashes have completely stopped and that the facilities do not carry the risk of attack.
This will also affect Qatar's $30 billion North Field expansion project. It is expected that there will be a delay in the calendar of the project, which aims to increase the production capacity from 77 million tons to 126 million tons per year by 2027 and the first production is planned to start in the third quarter.
Expectation of 150 dollars in oil prices
Stating that the increase in energy prices is inevitable if the conflicts are prolonged, Kaabi warned that oil prices may reach 150 dollars per barrel if the crossings in the Strait of Hormuz cannot be achieved.
Ship traffic in the Bosphorus, where 20 percent of the world's oil and natural gas passes, effectively stopped after the operations of the USA and Israel against Iran. It was reported that at least 10 ships were attacked, insurance costs increased and shipowners did not want to put personnel at risk.
Kaabi stated that safe passage could not be achieved because the 24-mile-wide strait was very close to the Iranian coast. The Minister said, "Looking at the current form of attack, it is very dangerous to put the ships in the strait. Iran targets military ships and shipowners see themselves as direct targets," he said.
US President Donald Trump's US Navy escort and additional insurance offer were not enough to start safe passage.
Chain impact warning in the global economy
Stating that the cut in energy exports will affect not only the energy markets but also the global economy, Kaabi said, "If the conflicts last a few more weeks, economic growth around the world will shrink.
Energy prices will rise, there will be a shortage in some products and a chain reaction will occur due to factories that cannot supply," he warned.
Stating that trade between the Gulf and the world may come to a standstill in addition to energy, Kaabi emphasized that this will have serious effects on both Gulf economies and countries trading with the region. The region provides a significant part of the world's petrochemical production and fertilizer raw materials.
Logistical difficulties will continue
Stating that there was no damage to Qatar's energy facilities on the sea, but the situation in the land facilities was evaluated, Kaabi stated that it is not yet clear how long the repair process will take.
The minister stated that even if production starts again, the difficulties in terms of logistics will continue. Stating that only six or seven of Qatar's 128 tanker fleet are currently ready, Kaabi emphasized that each ship takes one or two days to load and the capacity is limited.