ICIS – Scenarios show how ongoing Strait of Hormuz disruption could drive European gas prices higher
Published by Jessica Casey,
Editor
LNG Industry,
Escalating tensions in the Middle East have already disrupted shipping through the Strait of Hormuz, one of the world’s most important routes for global oil and LNG trade. The disruption has raised concerns about LNG exports from Qatar and increased competition for cargoes between major importing regions. As a result, European gas markets could face higher prices while storage levels are drawn down more quickly, adding pressure to secure supplies ahead of winter.
ICIS has outlined several disruption scenarios to examine the potential implications for European gas prices, LNG availability, and storage levels. The findings suggest that even a short disruption could trigger an immediate price spike, while a longer blockade would push prices higher for a sustained period and tighten the market for months.
The report also considers a possible policy response from the EU, in which regulators relax gas storage requirements to help ease short term price pressure. While this could soften the initial market reaction, it would leave Europe with lower reserves heading into winter and increase the risk of supply shortages later in the year.
Scenario 1: Four week blockade under current EU regulation
Assumptions
- Strait of Hormuz closed for four weeks.
- No LNG imports from Qatar.
- Existing EU gas storage rules remain in place.
Price impact
- TTF rises to about €60/MWh in March.
- Prices fall after reopening to roughly €40/MWh in April.
- Around €42/MWh in May.
- Summer prices stabilise in the mid to high €30/MWh range, about 20% above pre-war forward prices.
Market dynamics
- Immediate price spike due to lost LNG supply.
- Continued competition for replacement LNG cargoes.
- Storage refill demand keeps prices elevated through summer.
Key takeaway
Even a relatively short disruption creates a strong market reaction and leaves prices elevated for months.
Scenario 2: Four week blockade with regulatory flexibility
Assumptions
- Strait closed for four weeks.
- LNG from Qatar unavailable.
- EU relaxes gas storage requirements.
Policy changes
- Storage target reduced from 80% to 70%.
- Binding end of winter storage levels removed.
- Summer injection rules relaxed.
Price impact
- March prices about €53/MWh.
- April around €41/MWh.
- May about €39/MWh.
Market dynamics
- Lower storage requirements reduce the initial price spike.
- However, summer prices remain similar to Scenario 1 because storage still needs to be replenished.
Key takeaway
Relaxing storage rules mainly smooths short term price spikes, but it does not fundamentally reduce overall market tightness.
Scenario 3: Three month blockade
Assumptions
- Strait closed for three months until the end of May.
- LNG supply disruptions persist.
- EU storage rules unchanged.
Price impact
- TTF rises to about €85/MWh.
Market dynamics
- Prolonged LNG shortages tighten European supply.
- Competition for global LNG cargoes intensifies.
- Storage refill becomes significantly more difficult.
Key takeaway
A prolonged disruption would create sustained market tightening and significantly higher gas prices.
Read the article online at: https://www.lngindustry.com/special-reports/09032026/icis-scenarios-show-how-ongoing-strait-of-hormuz-disruption-could-drive-european-gas-prices-higher/
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