TTF surges up to 54 per cent, LNG flows through Strait of Hormuz under threat; duration of disruption seen as key to price trajectory
Global gas markets have been thrown into sharp volatility as escalating military tensions in the Middle East raise fears of prolonged disruptions to liquefied natural gas (LNG) supplies moving through the Strait of Hormuz, a critical chokepoint for global energy trade.
Benchmark European gas prices at the Dutch TTF hub surged as much as 54 per cent intraday before closing nearly 39 per cent higher, briefly approaching EUR 50 per megawatt hour. The spike came amid concerns that LNG flows from the Gulf, particularly from Qatar, could face sustained disruption if the conflict widens.
Around 20 per cent of global LNG trade transits through the Strait of Hormuz, making it one of the most strategically sensitive maritime corridors in the world. Any prolonged closure or restriction would directly affect Asian and European buyers, many of whom are already operating in a relatively tight global LNG market.
Reports of damage to energy infrastructure in Saudi Arabia and Qatar, along with temporary halts to certain LNG operations, further rattled markets. Shipping insurance premiums in the Gulf have reportedly risen, adding to freight costs and compounding supply uncertainty.
Analysts say the key variable now is duration. Short-lived disruptions measured in days may be absorbed through existing inventories and cargo rerouting. However, outages lasting weeks or months could significantly tighten spot markets, forcing buyers to compete for limited flexible cargoes at elevated prices.
Unlike oil, LNG lacks a coordinated global strategic reserve system, limiting policymakers’ ability to cushion supply shocks. Europe, which diversified away from Russian pipeline gas after the Ukraine war, remains exposed to LNG supply volatility despite higher renewable capacity additions in recent years.
Market participants are also watching for coordinated responses from major consuming nations. While discussions around emergency energy measures have surfaced, there is no immediate indication of large-scale strategic releases comparable to oil stockpiles.
Beyond immediate price spikes, sustained gas volatility could feed into broader inflationary pressures, complicating monetary policy in import-dependent economies. At the same time, higher fossil fuel prices may strengthen the long-term economic case for renewables and energy efficiency investments.
For now, traders remain focused on developments around the Strait of Hormuz. Whether the disruption proves to be a temporary shock or the start of a deeper structural energy crisis will likely determine the next leg of global gas prices.
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