Europe Gas Prices May Rise Further Amid Global Shortage
The war in Iran has caused significant disruptions to global natural gas markets, leading to price volatility and supply shortages. The loss of Qatari LNG has created a global shortage that affects Asia more than other end markets. However, this has also led to a problem for Europe as it tries to refill its low inventories ahead of peak demand season.
The conflict began in late February with strikes by the US and Israel on Iran, followed by Iran's blockage of the Strait of Hormuz. This key passage is vital for oil, refined products, LNG, and NGLs, leaving large volumes of energy commodities stranded. As a result, Qatar declared force majeure and shut-in LNG production, reducing global supply by about 20%.
Europe's gas storage woes mean that high global gas prices may not only outlast the war but also rise further if Europe struggles to keep pace with its peak demand period. In contrast, US gas prices have remained unaffected, trading on domestic market fundamentals and staying in the $2.50-$3.35/MMBtu range.