European gas prices jump 20% as Qatari LNG exports remain halted

Benchmark futures surged for a second day as countries in Asia scramble to secure alternatives after QatarEnergy’s facility was shut when it was targeted in an Iranian drone attack.

European natural gas prices rose more than 20% amid uncertainty over how long exports will be halted from the world’s largest LNG export plant in Qatar and the impact it will have on global energy supplies.

Benchmark futures surged for a second day as countries in Asia scramble to secure alternatives after QatarEnergy’s facility was shut when it was targeted in an Iranian drone attack. Several buyers are requesting LNG shipments to be delivered early to try to meet demand now, hoping that the situation eases before long.

The biggest question for the market is how long the fighting will last. The US sent conflicting messages about the duration of the war, with President Donald Trump vowing to do “whatever it takes.”

The price is up more than 60% since Friday’s close, volatility not seen since the energy crisis in 2022. Europe is entering the last stretch of winter with its vast gas tanks depleted, potentially intensifying competition for global flows during the upcoming stockpiling season. Traders are also questioning the severity of the attacks on the Qatari facility, which is one of the most significant unplanned outages ever for the industry.

The Qatari facility accounts for around a fifth of global supply. Even before the halt, the widening war in the Middle East had effectively closed the Strait of Hormuz, the route through which Qatar needs to ship its gas, since the weekend.

The situation threatens Europe’s stockpiling as potential competition with other regions for LNG cargoes widens price spreads. European summer gas flipped to a big premium over contracts for the following winter, making it uneconomical for traders to store the fuel.

“We expect substantial price volatility over the coming days as market participants assess the impact of lost production on their own supply portfolios,” said Ross Wyeno, associate director, lead LNG short-term analysis at S&P Global Energy. “The buyers which will be most aggressive at near-term spot purchases will likely be in the Asia-Pacific markets.”

The scramble for alternatives has already started to play out with Taiwan and South Korea among the countries hunting for other sources with vital electricity feedstock gas in jeopardy. At the same time, Chinese gas buyers said the country is pushing Tehran to keep Hormuz open.

Goldman Sachs Group Inc. analysts raised their forecast for European gas prices for April 2026 to €55 a megawatt-hour from €36. Since most of Qatar’s LNG goes to Asia, analysts, including Samantha Dart, expect Asian spot prices will rally relative to European prices.

The worries about supply disruptions are also playing out in the options space. Implied volatility in Europe’s benchmark futures — a measure of the cost of the underlying derivative contracts — has jumped to the highest since summer 2023, signaling a bullish overriding market sentiment.

“Security of supply could become an issue again for Europe”, said Huibert Vigeveno, Chief Executive Officer of the Swiss-based MET Group.

Bloomberg