A Turning Point in the Iran War
Our take
The recent escalation in the Iran War, particularly marked by the Iranian missile attack on a key natural-gas facility in Qatar, has significant implications that extend beyond regional geopolitics. President Trump's increasingly desperate rhetoric, declaring that "this war has been won" while simultaneously grappling with the reality of escalating tensions, reflects a broader struggle for control over a narrative that is rapidly unraveling. The attack on the Ras Laffan facility not only compromised Qatar's economy—projecting a staggering $20 billion loss in annual revenue—but also has the potential to disrupt global energy markets and supply chains. As detailed in related articles like Why Trump Thinks He Can Walk Away From the Strait of Hormuz and Mutually Assured Energy Destruction, the stakes are high. This crisis is reminiscent of past energy shocks that have sent ripples across economies worldwide.
The implications of the Ras Laffan attack are profound, particularly as they relate to global energy security. With Qatar being a major player in the liquefied natural gas (LNG) market, any disruption in its production capacity could revert supply levels to those seen in 2021, a scenario that would strain economies far removed from the Middle East. Countries like Sri Lanka and Pakistan are already feeling the pinch, with governments resorting to measures such as shorter workweeks to conserve energy. The ripple effects of this conflict extend to essential commodities, including fertilizer and helium, both vital for food production and technology. The prospect of a global food crisis looms large if the conflict continues to escalate, as planting seasons approach in the Northern Hemisphere.
Moreover, the geopolitical landscape in the Gulf is shifting. Qatar's longstanding relationship with Iran may now be jeopardized by this attack, forcing a reevaluation of alliances and security strategies in the region. The recent expulsion of Iranian diplomats from Qatar signals a departure from previously more amicable relations. As Qatar seeks to fortify its defenses and reestablish trust, it underscores a growing need for U.S. and European support in ensuring stability. The potential for a multi-faceted energy crisis, as highlighted by Fatih Birol of the International Energy Agency, poses a challenge not just for regional actors but for the global economy as a whole.
This evolving situation raises critical questions about the future of U.S. foreign policy in the region. As President Trump navigates this complex landscape, his inconsistent messaging adds to the uncertainty that stakeholders are grappling with. Will the U.S. and its allies find a sustainable diplomatic solution, or will tensions escalate further, leading to a broader conflict? The stakes are high—not just for the countries directly involved but for everyone who relies on stable energy markets and global supply chains. How this conflict unfolds in the coming weeks and months will undoubtedly shape the political and economic landscape for years to come.
As we watch this situation develop, it’s crucial to remain aware of the interconnectedness of global economies and the potential for local conflicts to have far-reaching impacts. The question remains: how will nations respond to the shifting dynamics in the Gulf, and what measures will be taken to prevent a full-blown crisis that could affect us all?
This story was updated at 4:45 p.m. on March 26.
President Trump has been sounding desperate lately for an off-ramp from the war he started, emphasizing progress in negotiations that may or may not reflect reality and declaring that “this war has been won” despite ample evidence to the contrary. An Iranian missile attack on a major natural-gas facility in Qatar last week might help explain his turn-the-page posture. The strike came in retaliation for an Israeli attack on Iran’s portion of a massive natural-gas field that extends into Iranian and Qatari territory, and it was more a warning shot than a full-on assault. But the effects on Qatar’s economy and global energy markets were profound, offering a glimpse of the catastrophes that might follow a broader Iranian military campaign against energy facilities across the Persian Gulf.
The damage to the Ras Laffan industrial facility, about 50 miles from the center of Doha, Qatar’s capital, reduced the country’s export capacity for liquified natural gas by 17 percent, creating a projected loss of $20 billion in annual revenue. The Qatari energy ministry says repairs will take three to five years. It took the country more than a quarter century—from the discovery of the natural-gas field off its shores to the first shipments of energy—to become the world’s third-largest LNG exporter and one of the richest nations on Earth. It took Iran one night to prove that it could derail the entire enterprise and imperil Qatar’s future.
Qatar’s state-owned energy company declared force majeure with customers in Italy, Belgium, South Korea, and China, meaning it can’t fulfill its contractual obligations owing to circumstances beyond its control. Qatar already had stopped LNG production shortly after the war began, for the first time in its history. That removed about a fifth of the world’s LNG supply. A prolonged stoppage could upend Qatar’s economy, whose growth was predicated on the expansion of its side of the gas field. The pain wouldn’t be contained to Qatar. If its LNG facilities remain offline for the rest of this year, global supply will effectively revert to 2021 levels, according to Columbia University’s Center on Global Energy Policy.
Trump fired off a Truth Social post soon after the attack on Ras Laffan, insisting that the United States knew nothing about the initial Israeli strike. (Israeli officials said otherwise in press reports.) Israel would cease its attacks, he said. But if Iran hit Qatar’s facility again, Trump promised to “blow up the entirety” of Iran’s side of the gas field. On Saturday, he threatened to attack Iranian power plants if the country didn’t reopen the Strait of Hormuz by Monday evening. That ultimatum sent already surging oil prices even higher, and after an ensuing market panic, Trump announced a five-day reprieve, in light of the talks that he claimed were bearing fruit—but that Iran has claimed aren’t even happening.
Trump’s whipsawing public comments and social-media posts have created confusion throughout the war. But this much is evident: Despite all Iran has lost, it maintains the military capability to cause a global energy crisis. If Trump hadn’t known this before, the Ras Laffan attack offered a clear demonstration.
A few days after the attack on Ras Laffan, Fatih Birol, the head of the International Energy Agency, broke the silence he had maintained since the start of the war. The global economy is now facing a “major, major threat” from the disrupted flow of oil and natural gas, Birol warned during an event in Australia on Monday. More than 40 energy facilities across nine countries have already been severely damaged, he noted, so even if the war ended this week, it could take months or years to bring supplies back to prewar levels. Birol compared the loss of oil supply from the current war to the two major energy crises in the 1970s. The loss of natural gas, he added, is equivalent to the supply shock experienced after Russia’s invasion of Ukraine in 2022. “This crisis, as things stand now, is two oil crises and one gas crisis put all together,” he said.
Countries far from the Middle East are already feeling the acute pain of shortages. Sri Lanka, Pakistan, and the Philippines announced that government employees would work only four days a week, in order to conserve electricity and gasoline. In Thailand, where Qatar accounts for more than 40 percent of LNG supply, government workers were told to cancel overseas trips and use stairs instead of elevators.
[Read: The Iran war’s next threat is to food and water ]
The attack on Qatar has implications beyond the energy market. The country is one of the world’s leading producers of urea, a key component of fertilizer. With spring planting season coming in the Northern Hemisphere and fertilizer not shipping out of the Gulf, a global food crisis could be on the horizon. Qatar also provides a third of the world’s helium, a by-product of natural-gas production and a key ingredient in the manufacturing of computer chips and medical imaging equipment. Shipments of that crucial element have also ceased.
Qatar is accustomed to instability in its backyard disrupting delicate supply chains and eating into its bottom line. During the Iran-Iraq War of the 1980s, tanker ships caught in the cross fire ended up at the bottom of the Persian Gulf, which scared off potential customers. The war then deferred economic growth. But the war now is devastating it.
Iran and Qatar are linked by geology. The natural-gas field is by far the largest deposit on the planet. Qatar’s portion is approximately 2,300 square miles, about half the land area of the entire nation. That shared natural resource is a big reason Qatar has long maintained closer relations with Iran than its neighbors—to their consternation. In 2017, four regional rivals implemented a land and air blockade of Qatar, citing comments by its emir praising Iran as a great power. (Qatari officials claim that the statements were fabricated in an elaborate computer hack. The country weathered political and economic isolation with the help of LNG exports because shipping routes remained open.)
Now that Iran has attacked Qatar, their future relationship is in doubt, and rivals have found a new reason for solidarity. Three of the four countries that blockaded Qatar—Saudi Arabia, the United Arab Emirates, and Bahrain—have also been the target of Iranian drones and missiles. (The fourth, Egypt, is further from the action.) Following the strike on Ras Laffan, Qatar expelled two senior Iranian diplomats and threatened more if Iran’s campaign continued.
[Read: The Gulf countries can’t take much more ]
“There will need to be a lot of effort to reestablish the trust in the relationship with the Iranians,” Majed al-Ansari, an adviser to Qatar’s prime minister and the chief spokesperson for its foreign-affairs ministry, told me. And with that will come a new focus on deterrence, he said. Going forward, Qatar can be expected to spend much more of its wealth on air defenses, fighter planes, and other military hardware.
“We need to have very frank discussions with our security partners in the U.S. and Europe about how to reestablish this deterrence,” al-Ansari said. That’s perhaps a diplomatic way of saying that Qatar needs protection, and it really needs the Americans and the Israelis to stop giving Iran reasons to blow up the backbone of its economy.
Qatar has geared much of its foreign policy toward solving other countries’ problems, acting as a mediator in wars, territorial disputes, and hostage negotiations. It’s not a party to the current diplomatic efforts to achieve a cease-fire between Iran and the United States. But Doha is pressing both sides to find an exit.
“The longer the conflict continues, the more it harms everyone—not just in the region,” al-Ansari said. When we spoke, Trump had not yet announced his reprieve on strikes against Iranian energy facilities, which he extended to April 6 in a Truth Social post this afternoon. After that, we’ll know better if the crisis is contained or about to get much worse.
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The dynamic is like a psychology experiment played out on a global scale: America can administer shocks to other countries without feeling much pain itself. The man at the control panel is Donald Trump. The president, a lover of leverage, not only understands that American allies are bearing the brunt of his actions—he is reveling in it. In his prime-time speech from the White House on Wednesday, Trump said that the strait’s closure was not America’s problem: “The United States imports almost no oil through the Hormuz Strait and won’t be taking any in the future.” As far as he was concerned, all of the suffering countries could simply fix the problem themselves. “Build up some delayed courage,” the president said. “Go to the strait and just take it, protect it, use it for yourselves.” He went on, “When this conflict is over, the strait will open up naturally. It will just open up naturally.” In other words: Best of luck! The next day, the clear lack of an American-led plan to open the strait caused stock-market declines and oil prices to shoot up nearly 8 percent. Many of America’s allies in Asia—where the price of LNG has roughly doubled since the start of the war—are already taking extreme measures. The Philippines, whose power plants run predominantly on imported fuel, has declared a state of emergency; it may order a grounding of civilian aircraft. In Japan, ferry services are being cut back and bathhouses are shutting down. South Korea is restricting the export of jet fuel. In Pakistan and Bangladesh, which are heavily dependent on Middle Eastern oil and have small stockpiles, violence is breaking out at gas stations. For American consumers, the cost to fill up a car has increased since the war began by $1 a gallon—because oil prices are set on the global market. Yet this is counterbalanced by the $60 billion windfall that American oil producers could earn if prices remain high. The U.S. price of LNG, by contrast, is set in a more localized market, and has gone almost unchanged. [David Frum: Why Trump didn’t predict the gas-price spike] In Europe, LNG prices are about 60 percent higher than before the war. The last tankers that departed Qatar before Iran bombed its Ras Laffan facility have been arriving in European ports. Thereafter, supplies will diminish quickly. European reservoirs of LNG were already low because of a colder-than-expected winter. Britain and Italy, where electricity comes disproportionately from gas-fired power plants, will be hit the hardest. Unlike the Persian Gulf oil supply, some of which can be routed overland, LNG is well and truly stuck until the Hormuz crisis is resolved. If and when a cease-fire occurs, restarting production will take weeks—and Iran’s attacks have destroyed 17 percent of Qatar’s LNG-exporting capacity, which will require years to repair. The United States will not have such monumental problems, but it will have some—all of which cut against Trump’s previously pledged goals. Having campaigned in 2024 against Biden-era inflation, Trump will be directly responsible not just for higher prices at the pump, but for higher general inflation, because fuel is an intermediate input in the production of most goods. Trump pledged to make buying a house easier for Americans: The average interest rate on a 30-year fixed-rate mortgage has shot up by half a percentage point since the start of the war, as markets anticipate that the Federal Reserve will now be more hesitant to pursue expansionary monetary policy. Trump pledged to do right by farmers, who had already been buffeted by his erratic tariff regime and Chinese retaliation. But because one-third of the world’s fertilizer flows also transit through the Strait of Hormuz, farmers face much greater costs as the spring planting season begins. 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- Mutually Assured Energy DestructionA few years ago in Dhahran, the Saudi state oil company, Aramco, gave me a tour of its headquarters, a facility so sparkling and orderly that one could forget that its whole purpose was to extract from the ground one of the filthiest substances on Earth. The most impressive stop on the tour was the Aramco emergency command center, which I imagine is paying its workers a lot of overtime right now. It looked like the control room for a mission to Alpha Centauri. Men and women sat at their stations. The walls were aglow with constellations of green lights—each one, my host said, representing a functioning object in the Aramco galaxy of pipelines, valves, ships, buses, heat exchangers, and drill bits. If a light flashed red, it meant one of these objects was broken, and the people at those stations would vault into action to support the crew restoring it. 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In a 2019 attack that presaged the current war, a fleet of drones and a barrage of cruise missiles hit Saudi Arabia’s Abqaiq and Khurais oil fields. Abqaiq is the world’s most important oil field. Direct strikes on crude-stabilization columns and gas-oil-separation tanks reduced Saudi oil output by half. Saudi Arabia accused Iran of launching the attacks, and Crown Prince Mohammed bin Salman told me in 2022 that the U.S. was ready to punish Iran for the attack, but had held back to avoid “escalation.” Rebuilding that same infrastructure is hard. A single well-aimed strike can set back a whole operation for a very long time. On March 18, Iran attacked Ras Laffan, Qatar’s main site for liquefied-natural-gas production, and Qatar estimated that repairs would take three to five years. Taylor Coleman, an oil-and-gas operations expert at CapturePoint, told me that pipelines are relatively easy to fix, but refinery equipment is another matter. 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(Ras Laffan was the most ruinous hit. Both Ras Tanura and Yanbu were hit by debris from downed drones, and not fatally damaged.) But there is also a strategic consideration that might keep Iran from using maximum force. The logic of a devastating attack on oil-and-gas infrastructure is uncomfortably similar to mutually assured destruction: If Iran wipes out Saudi oil production, the immediate annihilation of its own infrastructure is nearly certain. The two countries rely about equally on oil and gas as shares of their exports, so such an attack by Iran would be tantamount to economic murder-suicide. It would also end all polite remonstrance from Iran’s neighbors, who have suggested that Iran’s regime might survive the war, if it forswears attacks, blockades, and terrorism. A direct attack on the oil fields would force the conclusion that the regime must fall. Destroying energy production in the Persian Gulf would also deal a grievous blow to Iran’s ally China, which devours both Arab and Iranian oil and would be left energy-hungry for years. [Shane Harris: A turning point in the Iran war] The final reason these attacks have not yet happened is probably the most important. Although Iran and the Gulf Arabs can mutually assure each other’s destruction, only the Arab oil-and-gas fields are assured to be reconstructed. Decades of sanctions and isolation have left Iran’s facilities ragged and corroded. If the Iranian regime somehow survives the war, no relief for this decrepitude will be forthcoming—whereas the Kuwaitis, Qataris, and Saudis will be overrun with technical experts, and showered with financing. And that reconstruction will be combined with redoubled efforts to cripple Iran’s ability to attack the fields again. The Ras Laffan attacks show that some constraints are physical and metallurgical, and even ultra-rich Qatar will have to spend years rebuilding. But cooperation of rich allies can work wonders. After the 2019 Abqaiq attack, Saudi oil was flowing at pre-attack levels within a matter of weeks, in part because when the U.S. and China both want your oil, they will defy economic and physical laws to obtain it. The purpose of the Iranian military was never to win a war—there is no “winning” a war against a military as advanced as America’s—but to deter and punish anyone who started a war with it. This logic of deterrence bought Iran decades, which is why it can boast a glorious past of successful resistance against American power. The same logic now would lead to escalation beyond Iran’s ability to manage, and could cost it an equally boastworthy future.