The cost of natural gas in the European market has significantly increased after Iran once again closed the Strait of Hormuz, leading to a halt in energy supplies from the Persian Gulf.
This is reported by Finway
Futures Surge and Impact on the European Market
Futures prices for the benchmark TTF index rose by 11%, reaching €43 per megawatt-hour. This has offset the decline recorded last Friday after the previous reopening of the strait for commercial shipping. According to Masanori Odaki, Vice President of Gas and LNG Market Analysis at Rystad Energy, European countries may face difficulties replenishing gas reserves without additional volumes of LNG imports. Europe will have to compete with Asian countries that are also seeking alternatives to Qatari fuel.
“Europe may struggle to replenish reserves without additional LNG imports. At the same time, European countries will have to compete for available volumes with Asia, which is also looking for a substitute for Qatari fuel.”
Impact of the Strait of Hormuz Blockade on the Global Gas Market
As of today, vessel movement through the Strait of Hormuz remains blocked due to the risks of shelling. Tankers carrying Qatari LNG that approached the strait in recent days have been forced to either turn back or anchor. Energy exports from the region have virtually ceased following the initiation of military operations by the U.S. and Israel against Iran in late February. This has led to supply disruptions of nearly 20% of the world’s LNG volume.
Commercial traffic through the Strait of Hormuz was completely halted on April 20 after a brief resumption. The situation worsened after U.S. naval forces detained an Iranian vessel for the first time, causing further escalation of tensions in the region.