Qatar has stopped shipments of LNG through the Red Sea, a move which could force Britain into relying on its emergency fuel stocks.
As Houthi rebels attacked vessels near the Bab El Mandeb strait, the Gulf nation, Britain’s third largest gas supplier, “paused” LNG shipments through the strait. QatarEnergy is the state-owned giant that may reroute ships to Africa as the conflict continues in the region.
A senior source said to Reuters: “It’s a pause for security advice. If passing [through] the Red Sea is unsafe, we will travel via the Cape.”
The US and UK navy forces have launched military strikes on the Houthis, causing at least four LNG tankers to be delayed.
A diversion around Cape of Good Hope could add 10 days to the delivery time.
Analysts warned the UK could be forced to pay for gas imports from Europe or draw on its reserves due to the delays. The disruption coincides with a cold spell that has pushed up gas demand in the UK and Europe.
Qatar is the third-largest gas supplier in Britain, supplying nearly 14pc. Qatar is an important source of LNG for the UK, accounting for 30pc in 2022.
Callum Macpherson of Investec’s commodities department said that the UK could be forced to reduce its gas stocks due to the delays in shipments.
According to Mr Macpherson, the UK has only a small amount in storage. This is enough gas for seven days of usage based on demand levels.
Qatar is concerned about its ships in the area despite the fact that it plays a key role in the Middle East as a mediator.
Ismail Haniyeh continues to be hosted by the Gulf state in Doha in a bureau of politics. This decision has worried some Western allies.
The Houthi rebels in Yemen, who are supported by Iran, said that their attacks on vessels were in response to Israel’s actions against Hamas.
Simon Mabon, Director of the Richardson Institute, University of Lancaster said that Qatar’s decision suggests Iran’s influence on the Houthi Rebels may be limited.
Mr Mabon warned the conflict could derail diplomatic ties in the Middle East. He said, “It’s a very precarious time right now.”
The prospect of a disruption in the global gas markets has not yet led to a rise in prices. On Monday, natural gas prices fell by 2pc.
Bjarne Schildrop, Chief Commodities Analyst at SEB Bank, explained that this is because European gas storage has reached nearly 80pc, which is well above the normal 65pc for this time of the year.
The latest economic impact of Houthi attacks on the Red Sea is evident in the decision of state-owned QatarEnergy, which has halted deliveries.
Due to parts shortages, manufacturers including Tesla have temporarily stopped production lines. Meanwhile, supermarket bosses have warned that the disruption could impact supplies and prices.
QatarEnergy and the UK media office of Qatar’s government did not respond when contacted for comments.
“Global energy markets continue to function as usual following recent attacks on the Red Sea,” said a Department for Energy Security and Net Zero spokesperson.
The UK has one the largest LNG import capacity in Europe. We also have a variety of natural gas resources, including our domestic production.
We do not anticipate any disruption in UK gas supply following this recent announcement.