Europe’s Gas Crisis Deepens as Hormuz LNG Crunch Drives Prices Higher
European natural gas prices have surged after the war in Iran constrained roughly a fifth of global LNG supplies by restricting shipments through the Strait of Hormuz. Tightened LNG flows from Qatar and other Middle Eastern suppliers have pushed storage levels to multi-year lows, raised energy costs for households and industry, and added to inflationary pressure across the eurozone.
Why It Matters
The disruption has driven prompt LNG cargoes toward Europe at significantly higher prices, increasing bills for consumers and firms and prompting policy responses including ECB rate hikes and calls for demand-reduction measures. Persistently tight supply and low storage raise the risk of renewed price shocks if winter demand rises or the crisis continues.
Key Facts
- Share of global LNG affected: About one-fifth of the world’s LNG supply trapped behind the Strait of Hormuz
- European gas storage (as of Sept. 28): 71% full (compared with a five-year average of 86% for the same date)
- Germany gas storage (current filling season): Approximately 57% full
- QatarEnergy force majeure extension: Through November
- Edison force majeure duration: Runs through early December; 35 cargoes under its long-term deal with Qatar have not reached Italy so far this year
European natural gas markets have tightened sharply since the outbreak of war in Iran, which has left about a fifth of global liquefied natural gas effectively unable to transit the Strait of Hormuz. The resulting shortfall — largely reflecting reduced availability of Qatari LNG cargoes — has lifted spot gas prices in Asia and Europe to levels not seen since the 2022-23 energy crisis, as buyers compete for cargoes that can be delivered without using the chokepoint.
The disruption has pushed storage levels in the EU well below typical seasonal norms: Gas Infrastructure Europe data show storage at 71% full on September 28, versus a five-year average of 86% for that date. Germany, Europe’s largest economy, is particularly exposed with storage around 57% full this filling season, prompting concern about supply security if winter weather turns colder than expected.
Market mechanics have amplified the strain: a futures curve in backwardation discourages commercial buffering of gas, and the technical difficulty of ship-to-ship transfers for LNG has limited the volume able to bypass the strait. While some Qatari and UAE cargoes have transited recently, volumes remain too small to restore balance. QatarEnergy has extended a force majeure on LNG deliveries through November, and Italy’s Edison says its force majeure runs to early December, noting 35 contracted cargoes have not arrived this year.
Europe has sought to diversify supplies and has drawn more prompt cargoes that previously flowed to Asia, helped by the collapse in the price premium for shipping U.S. cargoes to East Asia. Authorities and major importers insist there is no immediate shortage, pointing to greater access to LNG and broader supplier connections. Still, the higher cost of securing prompt supply is feeding through to consumer energy bills and industrial energy costs, contributing to inflationary pressure that has already prompted the European Central Bank to raise interest rates twice since June. EU officials are urging governments to consider measures to sustain injections and reduce gas and electricity demand while the situation endures.
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Original source: OilPrice.com