Energy markets across Europe were thrown into disarray after military strikes by the United States and Israel on Iran triggered severe disruptions in one of the world’s most strategic maritime corridors. Benchmark gas prices more than doubled as shipping activity through the Strait of Hormuz collapsed and Qatar temporarily suspended liquefied natural gas (LNG) production at key facilities, amplifying concerns over tightening global supply.
The Strait of Hormuz, a narrow passage linking the Persian Gulf with global sea routes, is responsible for roughly a fifth of worldwide LNG exports. It is particularly vital for Qatar, whose overseas deliveries depend almost entirely on this route. In the wake of the escalation, commercial tanker movements through the strait have largely ceased, creating immediate bottlenecks in energy transport.
The dual shock of interrupted production by QatarEnergy and obstructed shipping sent traders scrambling. Europe’s primary gas benchmark at the Dutch Title Transfer Facility (TTF) recorded sharp gains, with April contracts climbing to 65.5/MWh by late afternoon trading. Just days earlier, on 27 February, prices had closed at 31.95/MWh. Compared to the previous trading session alone, the increase approached 47%.
Qatar represents approximately one-fifth of global LNG export capacity, and the shutdown of its major terminals marks one of the most serious supply disturbances since Russia’s full-scale invasion of Ukraine in 2022. The declaration of force majeure by QatarEnergy has heightened uncertainty among buyers holding long-term agreements, raising the likelihood that affected companies may be forced to secure replacement cargoes on the spot market at elevated prices. With Hormuz effectively inaccessible, attention has shifted to alternative exporters.
Competition between European and Asian importers is expected to intensify, particularly for cargoes originating from the United States and Australia. The situation is further complicated by relatively low storage levels within the European Union, where reserves stand at around 30%, noticeably below last year’s levels for the same period.
EU authorities are closely monitoring developments. The Natural Gas Coordination Group is scheduled to convene on 4 March to evaluate the implications of the mounting Middle East tensions and consider potential contingency measures aimed at stabilizing supply and preventing further market volatility.
