{"id":28291,"date":"2026-03-20T13:45:10","date_gmt":"2026-03-20T13:45:10","guid":{"rendered":"https:\/\/www.europesays.com\/iran\/28291\/"},"modified":"2026-03-20T13:45:10","modified_gmt":"2026-03-20T13:45:10","slug":"keys-to-understanding-why-gas-is-the-weakest-link-in-the-global-energy-supply-crisis-economy-and-business","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/iran\/28291\/","title":{"rendered":"Keys to understanding why gas is the weakest link in the global energy supply crisis | Economy and Business"},"content":{"rendered":"

Since the start of the U.S. and Israeli attacks on Iran<\/a>, the price of Brent crude, the European benchmark, has climbed 51%, while TTF, the European benchmark for natural gas futures, has surged 98%. Its price jumped 21% between Wednesday and Thursday to \u20ac63 ($73) per megawatt-hour following the bombing of South Pars, the world\u2019s largest natural gas field \u2014 which Iran shares with Qatar \u2014 and Tehran\u2019s subsequent retaliatory attacks on refineries and other energy infrastructure in Saudi Arabia, Kuwait, and Qatar. The consultancy firm Kpler attributes this sharp rise to \u201ca reminder that the geopolitical escalation is now directly impacting prices, trade flows, and investor anxiety.\u201d<\/p>\n

Until the start of the conflict, approximately 20% of the world\u2019s natural gas supply passed through the Strait of Hormuz<\/a>. The Persian Gulf countries exported 1.5 million barrels per day of liquefied natural gas (LNG) last year, according to data from the International Energy Agency (IEA). The majority, around 90%, goes to Asia, and the remaining 10% to Europe. The main problem facing the region\u2019s LNG production is the lack of alternatives to the Strait of Hormuz and the difficulty of converting it from gas to liquid and transporting it. \u201cApproximately 93% of Qatar\u2019s LNG exports and 96% of the UAE\u2019s LNG exports transited the Strait. There are no alternative routes to bring these volumes to market,\u201d the IEA acknowledges in a report.<\/p>\n

Warren Patterson, head of commodity strategy at ING, warns of the difficulty in offsetting the natural gas supply from the Gulf countries. \u201cAlthough the United States is working to increase its production capacity by 93 billion cubic meters annually between 2025 and 2027, this is still less than the 110 billion cubic meters of annual production currently affected. For the gas and liquefied natural gas markets, the only real solution in the short term is to balance the market by reducing demand.\u201d<\/p>\n

The paralysis of cargo ships on both sides of the Strait of Hormuz is compounded by the substantial damage caused by Iranian attacks on Qatari facilities<\/a>. The Ras Laffan complex houses the world\u2019s largest LNG export facility, whose installations (including petrochemical plants and refineries) cover an area of \u200b\u200b295 square kilometers (114 square miles). Saad al-Kaabi, CEO of the state-owned Qatar Energy, has acknowledged that the missile and drone strikes have affected 17% of the company\u2019s LNG export capacity and stated that repairs will take between three and five years.<\/p>\n

In addition to the closure of the Strait of Hormuz and the damage done to the region\u2019s energy infrastructure, there is already intense competition in the market. Nearly a dozen LNG carriers have altered their routes in recent weeks due to the \u201cwinner bid\u201d principle. This situation could accelerate, given that many supplying companies have destination flexibility clauses in their contracts that allow them to modify shipments if another customer offers more money. \u201cAs a result, Europe has to outbid Asia to secure its supply,\u201d warns Arend Kapteyn, chief economist at UBS.<\/p>\n

Which economies are most affected?<\/p>\n

The Asian continent is the most affected. According to data from the Elcano Royal Institute, 20% of Qatar\u2019s liquefied natural gas exports in 2024 went to China and 12% to India. Following them are South Korea (10%), Pakistan (7%), Taiwan (6%), and Japan (3%). Although China and Japan are the world\u2019s largest importers of LNG, they are less exposed to Qatar. Bruegel experts note that Beijing is in a better position than other Asian economies because it has increased its imports since the beginning of the year in response to U.S. threats against Iran. In addition to the imports made since the start of the year, ships carrying Iranian oil and gas have continued to cross the Strait of Hormuz since the beginning of the attacks, and Qatar holds substantial strategic reserves, totaling between 1.3 and 1.4 billion barrels of oil \u2014 enough to cover four months of imports.<\/p>\n

Kapteyn points out that \u201cfrom a limited perspective of physical delivery, Europe is less exposed than Asia, or at least Asia bears a greater burden of adjustment in obtaining alternatives, redirecting cargo originally intended for other locations, and absorbing higher shipping and insurance costs.\u201d<\/p>\n

Where does European gas come from?<\/p>\n

Since 2021, European Union countries have drastically reduced their dependence on Russian gas<\/a>, which now accounts for 16% of Europe\u2019s LNG imports and will be completely banned by the end of this year. In contrast, monthly imports from the United States have increased, reaching 60%, according to data compiled by the Bruegel think tank. Meanwhile, imports from the Middle East are limited to 6%. The U.S. has become the EU\u2019s second-largest gas supplier, second only to Norway.<\/p>\n

Bruegel does, however, warn of Europe\u2019s high dependence on energy imports. \u201cSecurity of supply depends on global markets and political events beyond Europe\u2019s control. Disruptions in major producing regions, shipping routes, or energy infrastructure \u2014 as demonstrated by the closure of the Strait of Hormuz as a result of this war and the damage to energy facilities \u2014 can quickly strain markets and cause prices to rise.\u201d<\/p>\n

\"SourceWhere will the price of gas go?<\/p>\n

The outbreak of war between Russia and Ukraine<\/a> in 2022 drove the price of benchmark natural gas in Europe to \u20ac339 ($392) per megawatt-hour and caused severe disruptions to natural gas supplies to European countries, which overnight faced the consequences of the closure of four Russian pipelines carrying 144 billion cubic meters of gas (more than the entire volume that has stopped flowing through the Strait of Hormuz). Patterson rules out seeing such a price again, although he cautions that \u201cit will ultimately depend on the duration of the supply disruptions in the Middle East.\u201d<\/p>\n

The Swiss bank Berenberg calculates that, in the worst-case scenario, the TTF would hover around \u20ac90 ($104) per megawatt hour for six months and would not return to pre-war levels until early 2027.<\/p>\n

\"PriceAre problems looming for Europe?<\/p>\n

In 2022, European countries agreed to ensure their gas storage facilities were filled to at least 90% of capacity before the arrival of winter. The goal: to guarantee sufficient reserves to heat homes and power businesses. This level, however, has fallen considerably after the harshest period of winter. European storage facilities are currently at 28.9% of capacity, according to data from the Gas Infrastructure Europe platform, which shows significant differences between countries: Spain is at 55.6% and the Netherlands at 7.4%. This inventory level is \u201cmuch lower than in previous years for this time of year, making Europe more vulnerable to cold waves in Europe and Asia, as well as disruptions in LNG supply,\u201d Citi warns.<\/p>\n

The challenge now will be to replenish storage facilities for next winter, which should be at 90% according to the aforementioned agreement between European countries. This could pose a challenge given the ongoing conflict in the Middle East, which, for the moment, shows no signs of ending. Analysts at the U.S. investment bank estimate that if inventories reach 80% of capacity in October, it would be \u201cone of the lowest levels in the last 10 years.\u201d They also believe that if the Strait of Hormuz disruption extends beyond three months, the price of TTF could reach \u20ac100 ($115) per megawatt-hour, and \u201cEurope could return to an energy crisis similar to that of 2022.\u201d<\/p>\n

\"GasLessons from 2022<\/p>\n

The closure of the gas pipelines connecting Russia and Europe following the outbreak of war in Ukraine forced European countries to react by building LNG terminals to process the shipments arriving from the U.S. Since the beginning of 2022, 19 LNG terminals have been built. In addition, joint gas purchases were implemented on the international market, preventing the supply from going to countries that would have paid an additional premium.<\/p>\n

Nevertheless, Bruegel strategists acknowledge that \u201cthe EU\u2019s gas supply security now depends more on the global LNG market. If global gas demand increases or supply is disrupted, the risk will translate into higher prices and greater competition for shipments, rather than a physical shortage.\u201d<\/p>\n

Sign up for our weekly newsletter<\/a> to get more English-language news coverage from EL PA\u00cdS USA Edition<\/p>\n","protected":false},"excerpt":{"rendered":"Since the start of the U.S. and Israeli attacks on Iran, the price of Brent crude, the European…\n","protected":false},"author":2,"featured_media":28292,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26],"tags":[262,54,138,13252,34,9283,39],"class_list":{"0":"post-28291","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-persian-gulf","8":"tag-china","9":"tag-europe","10":"tag-india","11":"tag-ing","12":"tag-iran","13":"tag-kremlin","14":"tag-persian-gulf"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@iran\/116261809353566987","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/28291","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/comments?post=28291"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/28291\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media\/28292"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media?parent=28291"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/categories?post=28291"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/tags?post=28291"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}