European Gas Prices Pressured by Qatar LNG Disruption

Key Moments

Qatari LNG Flows Disrupted

Commerzbank reports that the closure of the Strait of Hormuz has also brought shipments of liquefied natural gas from Qatar to a standstill. These volumes typically make up a significant portion of the global LNG market, accounting for around one-fifth of worldwide LNG supply.

Impact on TTF and European Exposure

The supply shock has translated into a sharp move in European benchmark prices. According to Commerzbank, the TTF natural gas contract surged to a three-year peak of almost EUR 70 per MWh at the beginning of the week. Despite this price reaction, the bank highlights that the European Union sources only a relatively small share of its LNG directly from Qatar.

Rerouting of Global LNG Trade

Commerzbank notes that buyers in Asia who previously relied on Qatari LNG are likely to intensify their purchases of LNG from the US. This shift would increase competition for cargoes that are also sought by European buyers.

At the same time, Commerzbank points out that Russia is “apparently considering stopping its remaining LNG exports to Europe and supplying LNG to Asia instead.” Such a move would further tighten supply options available to European customers.

Outlook for TTF Normalization

Commerzbank concludes that conditions in the gas market are likely to remain strained. The bank states that “on the gas market, too, the TTF natural gas price is only expected to normalise once Qatar resumes its LNG shipments.”