Why are gas prices soaring and how could it affect you?

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Ras Laffan Industrial City, pictured on 3 March

A major gas facility in Qatar has been hit by missile attacks, causing “extensive damage”, the country’s state-run energy firm has said.

The Iranian strikes follow reports that Israel hit a petrochemical complex in Iran.

The attack on Qatar’s Ras Laffan industrial hub has sent gas prices soaring.

What is Ras Laffan and what does it do?

Ras Laffan Industrial City is Qatar’s main site for producing liquefied natural gas (LNG), which is used globally for cooking, heating homes and generating electricity.

It produces about a fifth of the world’s supply of LNG.

As well as processing LNG, the industrial hub’s other facilities include a gas-to-liquids plant, LNG storage and an oil refinery.

It is located 80km (50 miles) north-east of Qatar’s capital Doha, and close to the world’s largest gas field that the country shares with Iran. The Iranian side is called South Pars; Qatar’s side is called North Dome and covers an area of more than 6,000 sq km (2,315 sq miles).

Ras Laffan is run by the state energy company QatarEnergy. Several international energy firms also have operations there, including US giants ExxonMobil and Chevron and the UK’s Shell.

Production has been shut down there since early March, shortly after war broke out.

How serious is the damage?

QatarEnergy said that the attacks on Ras Laffan have reduced Qatar’s LNG export capacity by 17% and an estimated loss in annual revenue of $20bn.

It will take up to five years to repair the damage to its production facilities, said the company, adding that this would disrupt LNG supply to Europe and Asia.

QatarEnergy also confirmed that Ras Laffan had been hit by two missile attacks, one that resulted in “extensive damage” to Shell’s Pearl gas-to-liquids facility and one that caused “sizeable fires and extensive further damage” to several of its LNG facilities.

Minister of State for Energy Affairs and QatarEnergy’s chief executive Saad Sherida Al-Kaabi said the strikes “weren’t just an attack on the State of Qatar but attacks on global energy security and stability.”

What is happening to gas prices?

Gas prices, which had already been rising since the start of the conflict, surged** since the Ras Laffan attack.**

On Thursday, UK gas briefly reached a peak of almost 183p per therm before falling back to 154.8p, an 11.3% increase from Wednesday’s level.

European gas prices were also up by more than 10% on Thursday.

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Matthieu Favas, commodities editor at The Economist, said the rise in prices was “huge”.

Analysts fear that the latest attacks mark an escalation in the conflict and that disruption to supply could continue for longer than initially thought.

What will happen now?

Energy research and consultancy firm Wood Mackenzie said the Ras Laffan attacks “fundamentally reshape [the] global LNG outlook” and the timeline for recovery was “likely significantly extended”.

“Market expectations had been for a short disruption, with a controlled restart restoring supply to pre-conflict levels by mid-2026. That outlook now appears increasingly unlikely,” said Kristy Kramer, head of LNG strategy and market development.

Nick Butler, former head of strategy at BP and former adviser to Gordon Brown, agreed, that the market was now expecting things to get worse.

“This will almost certainly cut off a level of supply of LNG to the world market. The price of gas in the world market will therefore inevitably rise, because that gas can’t be substituted very quickly at all, and maybe not for a very long time.”

However, Favas said prices were still a long way off the peaks seen in the aftermath of Russia’s invasion of Ukraine.

The head of QatarEnergy told Reuters that Iran’s attacks had knocked out 17% of its LNG export capacity and the damage would take three to five years to repair.

Where does the UK get its gas from?

The UK gets the vast majority of its gas from Norway and the US.

Norway accounted for three-quarters of the UK’s gas imports in 2024, and the US 17%.

LNG from Qatar made up just under 2%.

How does this affect people in the UK?

Even if you get your energy from another source such as solar or nuclear power, gas makes up a large part of the UK’s “energy mix”.

The energy regulator, Ofgem, uses gas as “the marginal source of power”, which sets prices for wholesale electricity in the UK.

So when gas prices go up, it has a big impact on electricity prices.

“In the short term, someone is going to have to pay more and we need to be planning for that,” Butler said.

“I think now we’ve come to a stage where the government will have to come in with a plan for energy security and a plan for protecting people who are going to pay these higher prices in two or three months’ time as the market works through.”

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