As the conflict in Iran closes out its first week, neighboring powers are starting to take stock of what damage the war has already dealt and where it might go from here. The Middle East has partly built its modern reputation on its role as the global oil and gas trade’s supplier-in-chief. But with tankers unable to navigate dangerous waters and missiles constantly streaking across the sky—some targeting crucial energy infrastructure—the effect on the fuel trade is already pronounced. Leaders warn that the longer the war lasts, the worse it will be for the global economy.

“This will bring down the economies of the world,” Saad al-Kaabi, Qatar’s energy minister and CEO of its state-owned energy company, told the Financial Times on Friday. “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.” 

Qatar, like all of the major oil and gas exporters along the Persian Gulf, has had to almost entirely halt shipments over the past week. Tanker traffic through the Strait of Hormuz that links the Gulf to the rest of the world has been at a standstill as operators fear attacks and insurance companies cancel war coverage.

Normally, one-fifth of all globally traded petroleum products and liquefied natural gas (LNG) passes through the strait. Qatari exports are a massive part of that mix, especially LNG, with the country, around the size of Connecticut, accounting for around 19% of global LNG supply.

Earlier this week, the Ras Laffan LNG export facility in northern Qatar, the largest of its kind in the world, was targeted in an Iranian drone attack, forcing the plant to close down for the first time in its three decades of operation. The extent of the global energy fallout will depend on the closure’s duration, but the facility’s shuttering already caused gas prices in Europe, one of the biggest importers of Qatari gas, to spike 50% on Monday.

“We don’t yet know the extent of the damage, as it is currently still being assessed. It is not clear yet how long it will take to repair,” al-Kaabi told the FT.

For Qatar, the war has undermined the country’s hard-fought reputation as a stable and dependable LNG producer in a region where instability has frequently sent energy markets into a frenzy. “We are a reliable supplier for our buyers,” al-Kaabi told S&P Global in 2020. In its bid to rise as the world’s premier energy producer, Qatar even pulled out of OPEC, the cooperative of major petroleum producers, in 2018. It was the first time a Middle Eastern country had ever done so, and at the time, al-Kaabi said the decision had been taken to “strengthen Qatar’s position as a reliable and trustworthy energy supplier across the globe.”

Ripple effects beyond the pump

The primary buyers of Qatari gas are in Europe and Asia, but al-Kaabi warned that the effect would likely be felt around the world as energy inflation bleeds into other industrial processes. His statement echoed warnings from economists, including Mohamed El-Erian, Allianz’s chief economic advisor, that a prolonged war in Iran could lead to chronically higher inflation and stagnant growth worldwide.

“In addition to energy, there will be a halt on all other trade in between the [Gulf] and the world, which will have a significant effect on the economies of the [Gulf] and all the trading partners around the world,” al-Kaabi said. “There will be shortages of some products, and there will be a chain reaction of factories that cannot supply.”

The ripple effects of an extended energy disruption would reach far beyond the pump. Higher natural gas prices feed directly into electricity generation costs, meaning households and businesses across Europe and Asia could face sharply higher utility bills within weeks. Energy-intensive industries—steel, aluminum, fertilizers, chemicals—would be among the first to feel the squeeze, as their production costs surge alongside fuel prices. Some manufacturers may be forced to curtail output or idle plants entirely, amplifying the supply-chain disruptions already rattling global markets.

For Europe, the timing is particularly fraught. The continent spent years diversifying away from Russian gas after Moscow’s 2022 invasion of Ukraine, with Qatari LNG becoming a critical pillar of its energy security strategy. A prolonged outage at Ras Laffan would force European buyers to compete aggressively on global spot markets for alternative supplies from the U.S., Australia, and elsewhere, driving prices even higher.

Asia faces its own vulnerabilities. Japan, South Korea, and China are among the largest importers of Qatari LNG, and any sustained shortfall would force them to make difficult choices: draw down strategic reserves, negotiate emergency supplies at premium prices, or impose demand-reduction measures on industry. Japan and South Korea, which have limited domestic energy production, are especially exposed, given that energy security has been a persistent national vulnerability for both countries since the 1970s oil shocks.