Key Points
- European gas markets experienced a 40%+ price surge following Qatar’s decision to suspend LNG production after Iranian drone attacks on the Ras Laffan facility
- All LNG operations at QatarEnergy have been suspended following strikes on two gas production facilities
- More than 20% of worldwide LNG supply is now blocked due to Strait of Hormuz restrictions
- Goldman Sachs has increased its Q2 TTF projection to 45 euros/MWh from 36 euros/MWh, with warnings of potential 130% price escalation from previous week’s trading
- Depleted European gas reserves entering the refill season are intensifying supply concerns
European natural gas markets have experienced consecutive days of sharp increases following Qatar’s suspension of liquefied natural gas operations. The Dutch TTF benchmark, Europe’s primary gas pricing indicator, surged past 40% to exceed 62 euros per megawatt-hour during Tuesday trading.
The price acceleration came after QatarEnergy announced a complete shutdown of LNG operations at its Ras Laffan facility. The energy giant cited Iranian drone attacks on two of its natural gas installations as the reason for the suspension.
As the globe’s second-biggest LNG exporter, Qatar’s production halt carries significant implications. Although Asian markets represent Qatar’s primary customer base, an extended shutdown would create fierce competition between Asian and European purchasers for available supplies in global spot markets.
Market tensions had already begun escalating before the production stoppage. Futures contracts started their upward trajectory on Monday following Iran’s effective blockade of the Strait of Hormuz, a critical maritime passage at the Persian Gulf’s entrance.
The Strait of Hormuz facilitates over 20% of global LNG shipments. Iranian authorities have issued warnings about attacking vessels attempting passage through the waterway.
Experts at ANZ characterized the situation as “the biggest threat to world gas markets since Russia invaded Ukraine in 2022.” That previous conflict pushed European gas prices to unprecedented levels and sparked an energy emergency across the continent.
Goldman Sachs Elevates European Gas Forecasts
Goldman Sachs researchers, led by Samantha Dart and Frederik Witzemann, have revised their April TTF price projection upward to 55 euros per megawatt-hour. This represents a significant increase from their prior 36 euros per megawatt-hour estimate.
The financial institution’s updated second-quarter 2026 average forecast now stands at 45 euros per megawatt-hour, versus the earlier 36 euros projection. Goldman’s analysis suggests prices might escalate by up to 130% compared to last week’s trading levels.
TTF prices had climbed over 31% to approximately 58.60 euros per megawatt-hour by Tuesday. This positions the benchmark near its peak levels observed since 2023.
Approximately 5% of Europe’s gas comes from Middle Eastern sources. Despite this relatively modest share compared to Asian dependency, indirect market pressures through global spot trading are already driving significant price appreciation.
Depleted Storage Compounds European Challenges
Europe’s gas inventory sits below typical seasonal benchmarks as the continent enters the critical period for rebuilding stockpiles before winter. Unexpectedly high consumption for power generation during the previous winter has exacerbated the challenge.
Goldman’s research team indicated that ambiguity surrounding the duration of Qatar’s outage, paired with continuing Strait of Hormuz shipping risks, will “drive TTF prices temporarily higher still.”
While alternative supply sources are available, options remain constrained. United States LNG exports could potentially increase, though market participants indicate American production capacity alone would prove insufficient to offset a prolonged Qatari supply disruption.
The Center for Strategic and International Studies informed the New York Times that reduced gas availability in Asia might redirect Asian purchasers toward American and other non-Middle Eastern suppliers. Market observers suggest European prices may continue their upward trajectory even following QatarEnergy’s eventual production resumption.
Goldman Sachs noted that TTF prices were trading near their highest points since 2023 as of Tuesday morning.
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