Tension in the Red Sea; America’s Leverage in the Gas Competition with Qatar

As tensions mount in the Red Sea between Yemeni resistance forces and the United States, geopolitical tensions are on the rise, prompting concerns about the economic implications of war both regionally and globally, particularly regarding pricing and the security of energy supply routes.

Given that the Red Sea and the Suez Canal serve as pivotal pathways for oil and gas transit, nations that export these abundant resources are deeply apprehensive about the potential escalation of conflict in the area.

Qatar, a leading global producer of liquefied natural gas (LNG) and a vital supplier of Europe's gas requirements, relies on gas transit from the Red Sea to the Suez Canal and is apprehensive about the persisting insecurity along this crucial trade route.

During the Davos summit, Mohammed bin Abdulrahman Al Thani, Qatar's Prime Minister, cautioned that LNG shipments would suffer from attacks in the Red Sea, emphasizing that a crisis in this maritime route poses a serious threat to global trade.

According to The New Khaleej, Qatar Energy recently indicated that the Red Sea conflict might disrupt the delivery of certain LNG shipments, potentially necessitating alternative routes. In mid-January, Qatar Energy opted to temporarily suspend transportation via Bab al-Mandab due to heightened risks stemming from US airstrikes on Yemeni targets in this vital waterway.

During that period, a well-informed source informed Reuters that Qatar Energy had halted Red Sea transportation for security consultations. However, the source emphasized that the company's liquefied natural gas (LNG) production remained uninterrupted. It was underscored that should Red Sea passage become unsafe, Qatar Energy's shipments would reroute through the Cape of Good Hope in South Africa.

Since the onset of their attacks on Zionist vessels in mid-November, the Yemeni forces have refrained from targeting any gas tankers. Nonetheless, Qatar's hesitancy to utilize this corridor suggests escalated risk following US and UK strikes on Yemen.

The Red Sea's highly tense circumstances coincide with severe restrictions on gas exports via the Panama Canal, another critical LNG transport route, due to drought. Consequently, US LNG shipments to Asia may necessitate longer journeys via South Africa.

Qatar, alongside the United States, Australia, and Russia, stands as one of the primary players in global liquefied natural gas production. Qatar is actively engaged in the North Field Expansion project, the world's largest natural gas reservoir, spanning from the Persian Gulf to Iran's coastal waters and comprising roughly 10% of the world's known natural gas reserves.

There exists no viable path for promptly halting hostilities to facilitate LNG vessel passage through the Red Sea. Should conflicts persist in the region, Qatar could face surplus liquefied gas capacity.

Currently, Qatar faces a significant increase in liquefaction capacity without contracts as previous agreements are soon to expire, necessitating new contracts for exporting this volume of gas, where tensions in the Red Sea act as a deterrent, potentially prompting players, especially Europeans, to reconsider purchasing gas from Qatar.

Experts foresee that the tensions in the Red Sea and the Suez Canal, which have compelled ships to divert from these routes, will not yield immediate significant short-term repercussions but will entail enduring political and economic risks.

According to the "energy flux" institute, Qatar, the United States, and Russia emerge as the most active nations in dispatching liquefied gas shipments via the Suez Canal. As per the "S&P Global Ratings" institute, Qatar's shipments through the Suez Canal totaled 14.8 million tons in 2023, with the United States at 8.8 million tons and Russia at 3.7 million tons. Although Qatar leads in transporting goods from the East to Europe, it only satisfies 5% of the EU and UK's net imports.

The Impact of the Liquefied Gas Crisis on Europe

Undoubtedly, any disruption in energy transport routes will predominantly impact European nations negatively. Escalating tensions in the Red Sea could notably impede the shipment of liquefied natural gas to Europe. In December, the halting of five gas-carrying vessels due to Yemeni resistance forces missile operations in the Red Sea led to a 7% increase in gas prices across the continent.

The New Khaleej reports that the Suez Canal serves as a pivotal artery of global trade, facilitating significant LNG exports primarily from Qatar to Europe, as well as exports from the United States and Russia to Asia.

Data from Rystad Energy reveals that Qatar's LNG trade to Europe through the canal amounted to 19.84 million tons in 2023. To date this year, the country has exported 13.74 million tons of LNG to Europe. Qatar accounted for approximately 13% of Western European gas consumption last year, with expectations for this figure to rise in the future due to recent agreements between Doha and European counterparts.

Lu Pong, a senior analyst at Rystad Energy, discussed the impact of Red Sea tensions on liquefied gas transport to Europe, noting, "Routing Qatari vessels to Europe via the Cape of Good Hope would extend travel time by around 18 days, effectively doubling current transit times. Should disruptions occur to Qatar's LNG shipments to Europe in the Red Sea, additional transport capacity may be necessary to accommodate the extra travel time."

According to the findings of this report, Europe experienced its highest level of LNG imports last year, attributed to Russia scaling back exports to the continent following the Ukraine war. However, demand this year fell short of expectations due to a warmer-than-projected winter and inadequate storage levels.

In response to the shortfall in Russian energy, European nations have turned to other global players for assistance in meeting their oil and gas requirements over the past couple of years. Among these countries, Qatar has emerged, aiming to address a portion of Europe's gas demands through the signing of new contracts. In November 2022, Germany and Qatar inked a 15-year agreement for LNG exports, with Berlin authorities indicating that starting from 2026, up to two million tons of LNG will be annually dispatched to the Brunsbüttel LNG terminal in northern Germany.

Given that the Suez Canal serves as the primary route for Qatar's LNG deliveries to Europe, tensions in the Red Sea could once again thrust Europe into an energy crisis. Consequently, numerous countries abstained from joining the US-led maritime coalition, viewing engagement with the Yemeni forces as contrary to their interests.

The American Campaign to Seize the LNG Market

Certain analysts argue that while tensions in the Red Sea pose a threat to Qatar, they offer an advantageous moment for countries such as the United States to assert dominance over energy markets.

According to Ackerman, a specialist in exploration, production, and significant investment ventures at the Middle East Institute in Washington, the escalation of instability in the Red Sea might entice the Asian market to secure additional LNG supplies from North America. In an article, Ackerman stated, "The escalation of instability in the Red Sea might entice the Asian market to secure additional LNG supplies from North America. This scenario generally promotes the development and extension of new LNG supply chains, mitigating transportation risks."

Ackerman predicts that US energy firms will profit from the appeal of the European Union market, while LNG from the western coast of North America will also become more appealing to Asian purchasers. Efforts to mitigate drought issues in the Panama Canal and geopolitical unrest in the Middle East will heighten competition with suppliers in the region, such as Qatar.

He further explained, "However, if the Red Sea becomes effectively closed to commercial shipping or military activities escalate in the area, undoubtedly, the energy market will experience more volatility in supply and prices." Ackerman highlighted that the persisting insecurity in the Red Sea would prompt Europeans to explore alternative routes, asserting, "Anticipate further shifts in the market, as Europe is expected to pursue increased volumes from producers in the Atlantic Basin, including the United States."

The American analyst contends that while LNG vessels under the Qatari flag are presently shielded from Red Sea attacks, Anasrullah will eventually distinguish that despite Qatari ownership, they might view their movement towards the European Union, some of whose members are seen as staunch supporters of the Zionist regime, as a potential target.

The analyst's assertion coincides with recent attempts by Washington officials to attribute tensions in this maritime area to Yemenis, alleging that Ansarullah has endangered international maritime security through its Red Sea operations. Despite Ansarullah leaders' consistent claims that their actions solely target Zionist vessels and their Western allies, they have not yet taken any measures against other nations.

Just as the United States instigated a crisis in Ukraine and subsequently halted Russian oil and gas exports to Europe, resulting in a fourfold increase in its own gas exports to European allies at premium rates, it is now pursuing fresh interests through aggression in the Red Sea. The United States seeks to disrupt Red Sea oil and gas transit routes, encouraging LNG procurement from the United States by intensifying media campaigns and escalating tensions to bolster its influence in global energy dynamics.

Repeated US warnings to Persian Gulf oil and gas exporters about Ansarullah's threats aim to dissuade Arabs from energy exports. However, Qatar maintains relatively amicable relations with Yemenis, and its vessels have traversed the Bab al-Mandab and Suez Canal unhindered over the past four months. Doha abstained from involvement in the Saudi-led coalition against Yemen and has sought to mediate an end to the regional crisis. Consequently, Ansarullah has not acted against Qatar's interests in the area so far.

The Suez Canal serves as a favorable route for US energy exports. According to Rystad Energy, the United States shipped 6.41 million tons of LNG through the Suez Canal last year, compared to 10.84 million tons via the Panama Canal. The consulting firm, using tracking data, indicated that a voyage from the United States to East Asia through the Suez Canal takes approximately 39 days, making it more cost-effective than the 42-day journey via the Cape of Good Hope. Hence, Washington regards the Red Sea as essential for exporting gas to critical Asian markets.

As Washington aims to control the energy market globally, oil and gas-producing nations such as Qatar possess the skill to navigate through crises. Recent tensions in the Red Sea have prompted regional countries to explore alternative routes. Qatar will undoubtedly seek new channels to shield itself from future crisis repercussions.

The decision of major shipping and energy companies to suspend their cargo passages through the Red Sea stems from the disruption of geopolitical stability in the Middle East. As the international community grapples with this complex situation, diplomatic efforts should prioritize de-escalation and sustainable solutions.

Given its strategic significance in global commerce, the Red Sea necessitates coordinated actions to ensure safe maritime passages and uninterrupted resource flow. Countries must navigate these turbulent waters and prevent further upheaval. However, achieving stability and security remains uncertain as long as the US and Zionist regime's interventions persist in the region.