European benchmark gas prices on the Dutch TTF hub surged by up to 45%, reaching approximately €46 per megawatt-hour. UK natural gas prices also saw a sharp increase, mirroring continental trends.
The significant price jump follows heightened tensions in the Middle East, a critical region for global energy flows, after US and Israeli strikes on Iran. QatarEnergy announced a halt to its liquefied natural gas production linked to the North Field gas reservoir following an attack on its facilities.
The Strait of Hormuz, a vital chokepoint for global energy transport including LNG from Qatar, has become a focal point of market fears. Iran has reportedly moved to block traffic through the strait, raising concerns about potential supply interruptions. Analysts note that approximately 20% of global oil supply and 38% of seaborne crude oil trade transit this passage.
While Europe is not solely reliant on Qatari gas, indirect impacts are significant. Disruptions to supplies heading to Asia could lead to increased global competition for LNG cargoes, driving prices higher worldwide, including in Europe. Qatar has become a crucial LNG supplier to Europe since 2022, as countries reduced dependence on Russian pipeline gas.
Compounding market anxiety are Europe's relatively low gas storage levels. EU storage is currently below 30% capacity as the winter heating season concludes, a decrease from last year. Major economies like Germany and France are particularly vulnerable, with storage levels around 20%. Lower reserves increase exposure to supply disruptions and price volatility in tightening global LNG markets.