India, Europe feel fuel crunch as Gulf gas supplies disrupted amid war 

Indian companies have reduced natural gas supplies to industries in anticipation of tighter supply from the Middle East after ⁠top global producer Qatar halted liquefied natural gas (LNG) production, as European gas prices have jumped further by more than 30 percent since the launch of the US-Israeli war on Iran.

Industry sources with knowledge of the matter told the Reuters news agency on Tuesday that top gas importer Petronet LNG Ltd had informed GAIL (India), the state-owned top gas marketing company, and other companies about lower supplies.

Cuts ranged from 10 percent to 30 percent, two ⁠sources told the agency. GAIL ⁠and Indian Oil Corp (IOC) informed customers of the gas supply cuts late on Monday, according to one of the sources.

India is the world’s fourth-largest buyer of LNG and relies heavily on the Middle East for its imports. The South Asian nation is the top LNG client for Abu Dhabi National Oil Company ⁠and the second-largest buyer of Qatari LNG.

The sources said the cuts have been set at minimum lifting quantities that would shield the suppliers from ⁠any penalties from the customers based on ⁠contractual terms.

They added that, to make up for the LNG shortfall, companies, including IOC, GAIL and Petronet LNG, were planning to issue spot tenders, ‌although spot prices, freight and insurance costs have surged.

QatarEnergy on Monday suspended LNG production following a drone attack, straining the global market. The measure followed Iranian drone attacks on a water tank at a power plant in Mesaieed Industrial City and an energy facility in Ras Laffan belonging to QatarEnergy, the world’s largest LNG producer.

Qatar’s state-owned energy company was forced to declare what is known as force majeure, when a company is freed from contractual obligations in the event of extraordinary circumstances.

The United States and Israel’s war with Iran also spilled over into the Strait of Hormuz, one of the world’s most critical energy chokepoints, prompting a surge in oil and gas prices.

Qatar’s LNG exports represent 20 percent of the global market. With fewer products reaching the market, LNG supply is down, causing prices to surge.

Meanwhile, European stock markets slid further at the start of trading on Tuesday, and the region’s natural gas prices soared again.

The Dutch TTF natural gas contract, considered the European benchmark, shot up more than 33 percent, having rocketed almost 40 percent on Monday.

The intensity of the attacks across the Middle East and the lack of any apparent exit ramp, with diplomatic overtures currently nonexistent in the public eye, set the stage for a prolonged conflict with far-reaching consequences, including for global energy markets.

US President Donald Trump said Washington has “the capability to go far longer” than its projected four-to-five-week timeframe for its military operations against Iran.

Tehran and its allies have hit back against Israel, neighbouring Gulf states that host US assets, and targets critical to the world’s production of oil and natural gas.