On Friday, March 13, the European natural gas market was experiencing a period of severe supply turmoil. Earlier this week, escalating geopolitical tensions in the Middle East led to the closure of the Strait of Hormuz, resulting in a complete halt to Qatari liquefied natural gas (LNG) exports. The sudden disappearance of this key source, which accounts for about one-fifth of global supply, directly pushed TTF natural gas prices close to €70 per megawatt-hour.


Although prices have currently retreated to around €50/MWh, the cumulative increase this month has exceeded 60%. European natural gas storage levels have fallen below 30%, the summer injection season is approaching, and intensified global bidding and reshaping of alternative flows are testing the fragility of the market's supply and demand balance. This event highlights the global interconnectedness of liquefied natural gas (LNG) trading, and price volatility will continue to dominate trading in the short term.

Disruption of liquefied natural gas supply caused by the closure of the Strait of Hormuz

Qatar, the world's largest exporter of liquefied natural gas (LNG), has a main production facility with a capacity of 77 million tons per year, and its exports consistently contribute one-fifth of global supply. The Strait of Hormuz is the only passage for Qatari ships to reach the sea; its closure immediately halted all LNG exports, with no new cargoes departing for several days. Although Europe's direct imports from Qatar are limited, the chain reaction of the disruption quickly spread to the global spot market. Traditional Asian buyers are scrambling for available cargoes, creating transoceanic bidding pressure. Meanwhile, Russia is considering diverting its remaining LNG flows from the European market to Asia, further reducing Europe's import capacity. This supply gap differs from traditional pipeline disruptions; its impact is rapidly amplified through LNG spot premiums, reducing global effective supply by approximately 20% in the short term, directly pushing up benchmark prices and compressing inventory buffers.

European market participants need to pay attention to the duration of this disruption. The restart of Qatari facilities involves technical and logistical restoration, which is expected to take several weeks. During this period, the restructuring of LNG trade flows will widen regional price differentials, and European benchmarks face continued upside risks.

The sharp fluctuations in European TTF natural gas prices and the market transmission mechanism

TTF natural gas prices jumped nearly 30% at the beginning of this week, hitting a three-year high, and have risen more than 60% this month. While they have since retreated somewhat, they remain in a high range, reflecting the immediate impact of the supply-demand imbalance. The following is a comparison of key recent prices:

Time Node	TTF Price (Euros/MWh)	Henry Hub Price (USD/MMBtu)	European inventory levels (%)
Early this week's high	Approaching 70	Approximately 3.0	Below 30
Current date (March 13th)	Approximately 50	3.25	Below 30
Last month's average	Approximately 32	Approximately 2.9	Approximately 35

The core of price volatility lies in the global bidding mechanism. With Asian buyers shifting their demand, US LNG exporters can prioritize markets with higher premiums, forcing European buyers to pay additional freight and premiums to lock in shipments. Low inventory levels amplify this effect, requiring Europe to accelerate replenishment ahead of the summer injection season, but reduced available shipments directly limit the injection schedule. Traders have observed a widening spread between TTF and Asian spot benchmarks, highlighting the regional unevenness of the supply shortage.

The ripple effects of Asian buyers shifting their focus and Russian investment flows.

Asian buyers, who previously relied on Qatari LNG as a stable source, will see a significant increase in demand for US LNG after the disruption. This shift has created a global cargo competition, forcing European buyers to compete in spot auctions and driving up overall costs. If Russia implements its plan to divert surplus LNG to Asia, it will further sever Europe's auxiliary supply channels, exacerbating the imbalance between pipeline and LNG in Europe's import mix. From a market perspective, while US export capacity continues to expand, it cannot fully compensate for one-fifth of the global shortfall in the short term, and the bidding results will be directly reflected in European end-user purchase prices. Traders need to monitor cargo flow data and spot premium indicators to assess the strength and sustainability of this chain reaction.

Outlook for Price Recovery Path and Potential Risk Factors

TTF natural gas prices are expected to remain high until Qatari exports return to normal. Market analysts point out that if the disruption is contained within 5 to 6 weeks, additional US production capacity and European inventory management can buffer the impact, and the average price for the whole of 2026 may stabilize around €50/MWh. If the disruption is prolonged, the tightening of global supply will amplify volatility and make inventory rebuilding more difficult. Risk factors include evolving geopolitical situations, weather-driven demand changes, and the utilization rate of US export facilities. In the long term, the expansion of new global liquefied natural gas production capacity will gradually ease, but in the short term, traders need to be wary of the sensitive amplification effect of price movements on fundamental events. The European market is responding through diversified procurement and inventory optimization, but normalization still depends on the key milestone of the resumption of supply from Qatar.

Frequently Asked Questions

Question 1: Why does Europe, with its limited direct imports of Qatari liquefied natural gas, still face severe price shocks?
A: While the disruption directly impacts European imports by a small amount, the one-fifth reduction in global supply has triggered Asian buyers to turn to US LNG, leading to a price war. Europe is forced to pay higher premiums to secure shipments, and Russia may redirect remaining flows to Asia, further tightening available supply in Europe. Inventories are already below 30%, amplifying the transmission effect and causing significant fluctuations in the TTF benchmark price.

Question 2: When is the export disruption in Qatar expected to end, and what impact will it have on price trends in 2026?
A: The restart will take several weeks. Analysis shows that if it is limited to 5 to 6 weeks, the US export buffer is manageable, and the annual average TTF (Total Traded Fund) may hover around €50/MWh. If it is extended, the pressure to rebuild inventory will increase, and the risk of price volatility will rise. However, once Qatar's production capacity recovers, global supply will return to balance, and prices are expected to gradually fall back to normal levels.

Question 3: What long-term implications does this event have for the global liquefied natural gas trade pattern?
A: This highlights supply chain fragility, with increased competition from Asian and European buyers intensifying US export pricing power. Russia's shift towards Asia demonstrates how geopolitical factors can reshape supply flows. However, in the short term, traders should focus on cargo auctions and spot premiums to grasp the pace of supply and demand rebalancing.