Europe Gas Prices Poised for Biggest Weekly Jump in Three Years as Middle East Conflict Cuts LNG Supply
Benchmark TTF prices surge 50% as Qatar halts production and Strait of Hormuz disruption removes 20% of global LNG from markets, reviving 2022 energy crisis fears.
European gas prices are headed for their largest weekly gain since summer 2023, with benchmark Dutch TTF futures jumping approximately 50% as military conflict in the Middle East has severed a critical artery supplying one-fifth of global liquefied natural gas.
Europe’s benchmark Natural Gas prices were on track early on Friday for a 50% weekly jump—the biggest one-week surge since the Energy crisis in the summer of 2023, as the Middle East war has cut off 20% of global LNG supply, according to OilPrice.com. The TTF gas price today is EUR 47.10 per MWh, up from approximately €32/MWh at the close of trading on February 28, before the crisis began.
The spike follows QatarEnergy’s announcement early Monday afternoon that it had halted liquefied natural gas production linked to the giant North Field gas reservoir following an attack on its facilities, as reported by Euronews. The shutdown occurred after joint US and Israeli strikes on Iran triggered retaliatory Iranian drone attacks across the Gulf region, effectively closing the Strait of Hormuz to commercial shipping.
Strait Closure Removes Critical Supply Route
The Strait of Hormuz handles around 30 percent of the world’s seaborne crude oil trade and nearly 20 percent of its liquefied natural gas, according to analysis from The Washington Institute. The ceasing of LNG transit through the Strait of Hormuz has resulted in approximately 20% of global LNG supply coming from Qatar’s 77 mpta Ras Laffan and UAE’s 5.8 mtpa Das Island plants being shut-in, according to shipping data compiled by Kpler.
Iran’s Islamic Revolutionary Guard Corps issued warnings prohibiting vessel passage through the strait, leading to an effective halt in shipping traffic, with tanker traffic dropping first by approximately 70% and over 150 ships anchoring outside the strait to avoid risks, and soon traffic went to about zero, according to coverage from multiple news sources.
Insurance markets have accelerated the crisis. Insurers announced they were cancelling war risk coverage after the IRGC said the Strait of Hormuz was ‘closed’, according to Al Jazeera. This withdrawal of war risk insurance coverage for tankers made transit commercially unviable, leaving hundreds of fuel tankers idling and unable to pass.
Industrial Sectors Face Renewed Pressure
European heavy industry, still recovering from the 2022 energy shock, now confronts a second crisis within four years. EU industrial gas use is concentrated in only a handful of sectors: chemical and petrochemical production (32%); non-metallic minerals, which includes cement, glass, and ceramics manufacturers (13%); and the food and beverage industry (13%), according to Columbia University’s Center on Global Energy Policy.
The chemicals sector has already been battered. Chemical industry leaders in Europe say that 101 industrial facilities have shut down since February 2024, leading to the loss of 75,000 jobs and the disappearance of 25 million tonnes of chemical production capacity, according to Euronews.
Europe’s industrial gas consumption fell 21% between 2021 and 2025 after Russia’s invasion of Ukraine triggered the first energy crisis. Many chemical and fertilizer producers shifted production to lower-cost regions or permanently closed facilities. The current supply shock hits an already weakened manufacturing base operating at reduced capacity.
Germany’s chemical plants operated at just 70% capacity so far in 2025, the weakest level in 20 years, with manufacturers still paying about three times more than their rivals in the US, according to Energy Connects. Steel and fertilizer producers face similar pressures, with many having already curtailed European operations in favor of imports from regions with structurally lower energy costs.
Storage Crisis Compounds Supply Fears
Europe enters this crisis with dangerously depleted reserves. With EU gas storage levels at around 30%, according to Gas Infrastructure Europe, the bloc is entering a critical period for refilling inventories ahead of next winter, as noted by Euronews.
Germany’s gas storage facilities were 20.5% full as of Saturday, while France’s stood at 21%, according to data from Gas Infrastructure Europe. These levels stand well below the 52% recorded at the same point in 2025, leaving countries more vulnerable to supply disruptions and price volatility.
The timing is critical. Europe typically begins refilling storage in April through October to meet the EU mandate of 90% capacity by November 1. The base case assumes a two-to-three week physical disruption, followed by gradual resumption of Qatari exports towards the end of March. Even under this optimistic scenario, March exports will be severely curtailed, April will carry residual impact, and prices above $10/MMBtu will suppress Asian demand for months beyond the immediate disruption, according to Kpler.
| Country | Storage Level | Status |
|---|---|---|
| Germany | 20.5% | Critical |
| France | 21% | Critical |
| Netherlands | 23.5% | Low |
| Spain | 56% | Comfortable |
| Portugal | 76% | Secure |
LNG Tankers Reroute to Asia
Europe now faces direct competition for alternative supplies. An LNG tanker that had been scheduled to head to France changed course and sailed toward Asia, according to the Financial Times, reflecting growing competition from Asian countries for available energy supplies. Three confirmed LNG cargo diversions have shifted from European to Asian destinations – approximately 0.2 million tonnes of redirected supply.
This represents a rational commercial response to price differentials. The Platts JKM benchmark for Asian spot LNG was assessed at a three-year high of $25.39/MMBtu on March 3, 2026, according to market data. The widening arbitrage between Atlantic and Pacific basins incentivizes suppliers to divert cargoes eastward, tightening European supply further.
Goldman Sachs warned that a monthlong halt to flows through Hormuz risks driving TTF and JKM prices toward 74 euros ($85.80) per MWh, the level that triggered large natural gas demand responses during the 2022 European energy crisis, according to CNBC.
ECB Faces Renewed Inflation Threat
The European Central Bank now confronts an unwelcome complication to its Inflation trajectory. An escalation of conflict in the Middle East has been one of the main risk scenarios tracked by the ECB. Eurosystem staff published a scenario analysis in December 2023 that indicated there would be a substantial spike in energy-driven inflation and a sharp drop in output if a conflict led to a persistent drop in energy supplies, according to an ECB interview with the Financial Times.
Inflation is projected to decrease from 2.1% in 2025 to 1.9% in 2026 and then to 1.8% in 2027, before rising to the Governing Council’s medium-term target of 2% in 2028, according to December 2025 ECB projections. Those forecasts, however, assumed no major energy supply disruptions.
“Directionally, a jump in energy prices puts upward pressure on inflation, especially in the near term, and such a conflict would be negative for economic activity.”
— ECB President Christine Lagarde, March 2026 interview
A jump in energy prices puts upward pressure on inflation, especially in the near term, and such a conflict would be negative for economic activity. The scale of the impact and the implications for medium-term inflation depend on the breadth and duration of the conflict, ECB President Christine Lagarde told the Financial Times on March 2.
The central bank had been expecting to maintain its key interest rate at 2.15% through 2026, but a sustained energy price shock could force a reassessment. Energy comprises a significant component of the Harmonised Index of Consumer Prices, and second-round effects through transport costs and industrial input prices could propagate through the broader economy.
Government Emergency Response
Gas storage filling levels in the EU remain stable. The Commission will continue to monitor the situation and keep regular communication with EU countries and market participants, according to a March 4 statement from the European Commission.
European governments retain emergency tools developed during the 2022 crisis, including coordinated demand reduction targets, joint LNG purchasing programs, and cross-border storage sharing mechanisms. Options under discussion include coordinated demand-reduction targets, accelerated joint LNG purchasing programmes, temporary price safeguards and financial support mechanisms for the most affected member states. The European Commission has stressed it will continue close daily monitoring with national governments.
The EU had been in the process of phasing out Russian gas entirely. Imports of Russian liquefied natural gas and piped natural gas have fallen from 45% in the pre-crisis years to 13% in 2025, and will be fully banned from the end of 2026 and autumn 2027 respectively, according to EU Council documents. That diversification strategy now faces an accelerated test.
Comparison to 2022 Crisis
The current shock differs from 2022 in critical ways. European gas demand has fallen structurally—from 506 bcm in 2022 to an estimated 449 bcm in 2025—reducing absolute volumes at risk. LNG import infrastructure has expanded significantly, with new terminals in Germany, Netherlands, and Finland providing additional entry points for non-Russian supply.
- European gas demand down 11% since 2022, reducing absolute exposure
- LNG import capacity increased with new German, Dutch, and Finnish terminals operational
- Storage levels critically lower (30% vs 52% in March 2022), reducing buffer capacity
- No gradual supply reduction—Qatar shutdown removed 20% of global LNG instantaneously
- US LNG export capacity 18% higher than 2022, but Asian competition for cargoes intensified
But vulnerabilities have also intensified. Storage levels are dramatically lower—30% versus approximately 52% at the equivalent point in 2022. The speed of the supply removal differs fundamentally: Russia gradually throttled pipeline flows over months in 2022, allowing incremental adjustment. Qatar’s shutdown removed 20% of global LNG supply instantaneously.
European gas prices have nearly doubled since Monday, and the situation threatens to reshape buyer confidence, supply strategies, and even energy policy worldwide. The consequences of the war for gas and LNG are uncertain but could rival those that followed Russia’s invasion of Ukraine in 2022, according to Wood Mackenzie analysis.
What to Watch
Qatar restoration timeline: Qatar’s Energy Minister told the Financial Times that even if the conflict ended immediately, Qatar would take weeks to months to normalise deliveries, after the shutdown of Ras Laffan. Plant cool-down and restart procedures require approximately two weeks from the point safe passage is confirmed, meaning March exports face severe curtailment regardless of conflict resolution.
Asian demand response: JKM prices above $25/MMBtu will likely trigger demand destruction in price-sensitive Asian markets, particularly in India and Pakistan. This would reduce competition for Atlantic Basin LNG cargoes, potentially capping European prices below worst-case scenarios.
Weather patterns: Europe’s refill season begins in April. Any extended cold weather through March would further deplete already-critical storage levels, intensifying summer competition for LNG cargoes and potentially pushing TTF prices toward the €74/MWh threshold that triggered industrial shutdowns in 2022.
US policy response: The Trump administration has indicated willingness to provide naval escorts and underwrite insurance for tankers transiting the Strait. Implementation details and carrier participation will determine whether this materially reopens the shipping route or remains symbolic.
ECB June decision: The central bank’s next policy meeting on June 12 will need to balance energy-driven inflation risk against potential demand destruction from sustained high industrial input costs. Forward guidance will signal whether the ECB views the shock as transitory or requiring a policy response.
Industrial curtailments: Chemical, steel, and fertilizer producers will face renewed margin pressure. Watch for production cut announcements, particularly from German and Italian manufacturers, as a leading indicator of broader economic impact.