The game has changed.
From the moment the United States and Israel attacked Iran, the nightmare scenario for the global economy that most people talked about was the closing of the Strait of Hormuz, the most important choke point for oil on the planet.
But a different and more disturbing nightmare began to unfold with direct attacks on the backbone of the Persian Gulf region’s energy production: the prospect of millions of dollars’ worth of long-term damage to facilities that supply a critical portion of the world’s natural gas.
Now, instead of wondering if the war would last for days or weeks, officials and economists are speculating about effects that could last for months and years.
“We have moved from stopping transit, which is a temporary measure, to attacking infrastructure, which has long-term effects,” said David Goldwyn, a former U.S. diplomat and Energy Department official.
This new phase of the war began Wednesday, when Iran carried out a retaliatory missile strike on Ras Laffan, Qatar’s vast energy complex. That target produces roughly a fifth of the world’s liquefied natural gas, a transportable fuel used to heat homes, cook food, power factories and generate electricity throughout Asia and Europe. [...]
The attacks showed that despite Iran’s relative weaknesses, the country is exerting enormous leverage over the global economy. By using small-scale, low-cost weapons to counter highly sophisticated and expensive missile systems, Mr. Goldwyn said, the Iranians “have demonstrated a long-term threat to be able to attack infrastructure throughout the Gulf.” [...]
Analysts at the energy consulting firm Wood Mackenzie have already warned that $200 a barrel is not outside the realm of possibility in 2026, up from about $73 before the war.
“I couldn’t fathom we would not start seeing economies fall into a recession with energy prices at that point,” Mr. Miller said. [...]
Though oil tends to grab headlines, the supply of natural gas in many ways is at the heart of the economic fallout from the intensified fighting in the Gulf this past week.
The facilities for processing liquefied natural gas, or L.N.G., are far less numerous than oil plants. Qatar’s, the world’s biggest, has not been operating for weeks, and is damaged. That also affects the price and availability of critical materials like fertilizer and helium, a byproduct of natural gas that is used to make semiconductor chips. [...]
Yet after years being whipsawed by a global pandemic, supply chain breakdowns and painful inflation, governments are limited — by depleted budgets and daunting debt loads — in their ability to respond to another crisis.
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