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Iranian drones hit Ras Laffan on Monday, QatarEnergy shut down the largest LNG export complex on the planet, and European gas futures posted their biggest single-day move since the 2022 Ukraine shock. US terminals are running flat out. There is no spare capacity to absorb this.
Two drones. That is what it took. Qatar’s Defence Ministry confirmed Monday that Iran launched two unmanned aerial vehicles targeting facilities at Ras Laffan Industrial City and Mesaieed Industrial City. No casualties were reported. The physical damage, according to initial assessments, was limited. QatarEnergy’s response was not. The state-owned firm halted all LNG production and associated products as a precautionary measure, per its official statement. Ras Laffan alone handles 77 million tonnes per year of LNG export capacity, roughly a fifth of global supply, according to Bloomberg. Three LNG carriers were berthed at the facility when the shutdown order came, and no LNG carrier has transited the Strait of Hormuz since February 28, per Vortexa vessel tracking data.
European Gas Repriced in Hours
Dutch TTF benchmark futures, the reference price for European wholesale gas, surged as much as 54% on Monday, according to Bloomberg. That is the largest intraday move since the chaotic weeks following Russia’s invasion of Ukraine in early 2022. British wholesale gas prices jumped nearly 50%. Asian LNG spot benchmarks rose close to 39%, per Al Jazeera’s reporting. Daily freight rates for LNG tankers spiked more than 40%, as NPR reported Monday. The mechanism here is straightforward. Qatar supplies approximately 20% of global LNG, the bulk of which transits the Strait of Hormuz. The strait is functionally closed. Even before the Ras Laffan shutdown, shipping traffic had collapsed to near zero after the IRGC broadcast VHF warnings declaring passage forbidden and at least four vessels were struck in Gulf waters since strikes began on February 28. Protection and indemnity insurers pulled coverage for the strait effective March 5, making the economic risk of transit prohibitive regardless of military reality. Maersk and Hapag-Lloyd suspended all operations through the waterway.
The timing could not be worse. European gas storage inventories have drawn down to just over 30% of capacity as of early March, according to AGSI+ data, compared with roughly 40% a year ago and well below the seasonal norms. The continent needs massive LNG imports through the summer months to refill storage ahead of next winter. That supply just got dramatically more expensive, if it arrives at all.
US Terminals Are Already Maxed Out
Here is the uncomfortable reality for anyone expecting American LNG to ride in as the cavalry. US export terminals are already operating near maximum capacity. Bloomberg reported Monday that US producers have little room to capitalise on the widening spread between domestic and overseas prices because the infrastructure is fully utilised. Average gas flows to the eight major US LNG export plants climbed to 18.5 billion cubic feet per day in February, matching the monthly record set in December, according to EIA pipeline data. US LNG export capacity stood at approximately 17 Bcf/d at the end of 2025, with expansion to around 19 Bcf/d expected through 2026 as Cheniere’s Corpus Christi Stage 3 continues ramping and Golden Pass brings Train 1 online.
Golden Pass LNG, the QatarEnergy-ExxonMobil joint venture in Sabine Pass, Texas, whose costs have ballooned past $11 billion after contractor delays, is in final commissioning with first cargo expected early this year. Train 1 can add roughly 800 MMcf/d of feed gas demand at full output. But Trains 2 and 3 won’t arrive until after 2026, per Natural Gas Intelligence’s analysis, following contractor bankruptcy delays in 2024. That additional capacity was always part of a measured ramp-up. Nobody planned for Qatar going dark overnight.
The Price Signal Is Already Moving
US natural gas futures rose Monday in sympathy with global benchmarks, though the domestic move was far more modest than Europe’s. Henry Hub had already been volatile. The EIA reported that spot prices averaged $7.72/MMBtu in January, the highest nominal monthly average since September 2022, driven by Winter Storm Fern and a record 360 Bcf storage withdrawal. Prices collapsed back below $3.50 in mid-February as weather normalised, but the Qatar shutdown injects an entirely different kind of premium. US natural gas spot was trading just above $3/MMBtu heading into this week, per EIA daily data. European TTF, after surging past €46 on Monday, blew through €58/MWh on Tuesday, its highest level since 2023, per ICE data. That spread is enormous, but irrelevant if there is no incremental export capacity to arbitrage it.
The EIA’s February outlook projected Henry Hub averaging $4.12/MMBtu in March and roughly $4.30 for the full year 2026, up 23% from its January estimate, with prices rising toward $4.40 in 2027 as LNG exports and data centre power demand outpace production growth. Those forecasts predate the Hormuz crisis entirely. If Qatari production remains offline for weeks rather than days, the European gas supply picture deteriorates into something far uglier than any base case model assumed, and US producers with exposure to global pricing will benefit even if physical export volumes cannot increase materially.
What the Market Is Pricing and What It Isn’t
The market is pricing a disruption. It is not pricing duration. Brent crude settled Monday up roughly 9% at $79.45, per CNBC, with Barclays projecting $100/bbl if the conflict persists for the four to five weeks Trump suggested. JPMorgan’s Natasha Kaneva warned that a war lasting more than three weeks would exhaust Gulf storage capacity and force production shutdowns, pushing Brent to $120. Deutsche Bank floated $200 in a full Hormuz blockade scenario. Those numbers sound extreme until you consider that no tankers are moving through the strait right now and that the IRGC commander said Monday any vessel attempting passage would be set ablaze.
For natural gas specifically, the risk is more structural. Qatar was midway through the massive North Field Expansion, the single largest LNG supply addition in history, designed to lift capacity from 77 to 126 million tonnes per year. Every week that Ras Laffan stays dark pushes that timeline further out. Meanwhile, European buyers who spent three years weaning themselves off Russian pipeline gas now find their LNG replacement supply chain running through an active war zone. US LNG equities and gas-weighted E&Ps with Gulf Coast exposure are the obvious beneficiaries. Cheniere, EQT, Antero, Comstock. But the upside is capped by physics. You cannot push more gas through a terminal than the terminal can handle. Size your positions accordingly.
