European gas prices jump 47% after Qatar LNG complex suspended

The cost of natural gas in Europe has risen sharply following the suspension of the world's largest liquefied natural gas export facility in Qatar.

Futures on the Dutch TTF hub - a key benchmark for gas in Europe - climbed more than 47% on March 3, topping 65 euros per megawatt-hour. Prices rose to their highest since 2023 and added more than 70% from levels on Friday, Feb. 27, Bloomberg noted.

The rise began amid the effective closure of the Strait of Hormuz on March 2, through which more than a quarter of the world's LNG supply passes, and intensified after QatarEnergy halted LNG production at the world's largest LNG export facility, Ras Laffan, due to an Iranian drone attack, The Wall Street Journal reported.

ANZ analysts called the situation the biggest threat to the global gas market since the military conflict in Ukraine began in 2022, WSJ reports. Qatar is the world's second-largest LNG exporter, and a prolonged outage could force European and Asian buyers to compete for limited spot volumes, the newspaper said.

If the flow of natural gas through the Strait of Hormuz stops for a month, prices in Europe could rise 130 percent from last week's levels, The New York Times quoted Goldman Sachs analysts as saying. "These shocks represent a significant escalation of conflict for international energy markets," Eurasia Group analysts said in a statement from the publication.

Warmer spring weather will reduce the immediate impact, although gas inventory levels need to be maintained to avoid pressure drops that could damage infrastructure, the NYT writes. Analysts warn that a prolonged supply outage would increase the cost of restocking.

"A lot depends on the scale of the disruption to supply through this key bottleneck," Natasha Fielding, head of LNG pricing at Argus Media, told the newspaper. - A short-term shutdown won't affect Europe much, but a longer one will raise concerns about how Europe will secure its gas supplies next winter."

At the same time, gas reserves in Europe remain below the seasonal norm, and the region will have to actively replenish storage facilities before the next winter. According to traders' estimates, even a possible increase in exports from the U.S. will not be able to fully compensate for the stoppage of Qatari LNG supplies, the Wall Street Journal concludes.

Norway, which has large reserves of natural gas, is not ready to increase production: producers are already working almost at full capacity, the country's Energy Minister Terje Osland told Bloomberg.

This article was AI-translated and verified by a human editor