Stories
European Gas Prices Surge Amid Qatar LNG Disruption, Hormuz Uncertainty
- •European natural gas futures rose as a QatarEnergy force majeure on LNG supplies to Edison SpA was extended until December, and to Pakistan until November, due to shipping difficulties through the Strait of Hormuz.
- •Uncertainty over global winter supplies is mounting as diplomatic efforts to reopen the Strait of Hormuz drag on, with Iran refusing to soften its conditions after the US rejected its latest proposal.
- •Europe faces a critical period to rebuild unusually low gas inventories before the heating season, with storage sites currently 71% full compared to a five-year average of 87%.
- •Around a fifth of the world's LNG previously transited Hormuz, and the prolonged disruption is expected to intensify competition among global buyers for the fuel.
- •The EU has warned member states about a potential energy price crisis, urging them to consider demand reduction measures and continue filling storage, while Germany discusses mandatory gas-storage filling for next year.
Key Questions Answered
Europe’s gas-storage sites are currently about 71% full, which is down from the five-year seasonal average of 87%. In Germany, facilities are just over 57% full, and the country has discussed mandatory gas-storage filling for next year due to difficulties in replenishing stockpiles.
QatarEnergy extended its force majeure on liquefied natural gas supplies to Edison SpA until December, while Pakistan received an extension into November due to ongoing shipping difficulties through the Strait of Hormuz. Meanwhile, some tankers have occasionally attempted to transit the waterway with transponders turned off to bypass security threats.
Benchmark prices could surge above €100 a megawatt-hour this winter if gas supply disruptions coincide with severe cold spells in Europe and Asia. Conversely, prices could fall if transit disruptions through the strait are resolved, though they are not expected to immediately return to pre-war levels below €30.
