TLDR
- European natural gas markets experienced a 40%+ price surge following Qatar’s decision to suspend LNG production after Iranian drone attacks on Ras Laffan facilities
- All LNG production at QatarEnergy facilities halted after drone strikes targeted two critical gas infrastructure sites
- More than 20% of worldwide LNG supply is at risk due to the Strait of Hormuz blockade
- Goldman Sachs increased its second-quarter TTF projection to 45 euros/MWh from 36 euros/MWh, with potential for 130% gains from previous week’s trading levels
- Below-average storage inventories across Europe are intensifying the supply shortage during the critical replenishment period
Natural gas markets across Europe have experienced dramatic volatility for two consecutive trading sessions following Qatar’s complete suspension of liquefied natural gas operations. The Dutch TTF benchmark contract, serving as Europe’s primary gas price indicator, rocketed beyond 40% higher to exceed 62 euros per megawatt-hour during Tuesday’s session.
The dramatic price movement came after QatarEnergy announced the complete shutdown of LNG operations at its massive Ras Laffan industrial complex. The state-owned energy company cited Iranian drone attacks on two critical gas processing facilities as the reason for suspending all production activities.
As the planet’s second-largest exporter of liquefied natural gas, Qatar plays a pivotal role in global energy markets. Although Asian markets represent Qatar’s primary customer base, any extended production disruption would create fierce competition between Asian and European purchasers in the limited global spot market.
Market tensions were already escalating before the production stoppage. Natural gas futures began their upward trajectory on Monday following Iran’s effective blockade of the Strait of Hormuz, a critical maritime corridor at the Persian Gulf’s entrance.
The Strait of Hormuz serves as the transit point for over 20% of worldwide LNG shipments. Iranian authorities have issued threats to target any vessels attempting passage through the strategic waterway.
Energy market experts at ANZ described the situation as “the biggest threat to world gas markets since Russia invaded Ukraine in 2022.” That geopolitical crisis propelled European gas prices to unprecedented levels and sparked an energy emergency across the continent.
Goldman Sachs Raises European Gas Price Forecasts
Goldman Sachs commodity strategists, led by Samantha Dart and Frederik Witzemann, have revised their April TTF price projection upward to 55 euros per megawatt-hour. This represents a substantial increase from their prior forecast of 36 euros per megawatt-hour.
For the second quarter of 2026, the investment bank’s updated average forecast stands at 45 euros per megawatt-hour, up from the earlier 36 euros projection. The Goldman team cautioned that prices could potentially surge by as much as 130% compared to last week’s trading levels.
By Tuesday afternoon, TTF contracts had already climbed more than 31% to approximately 58.60 euros per megawatt-hour. This positioning places the benchmark near its strongest levels observed since 2023.
Middle Eastern sources account for roughly 5% of Europe’s total gas imports. Despite this relatively modest direct exposure compared to Asian markets, indirect market pressures through global spot trading are already generating significant price momentum.
Europe’s Storage Levels Add Pressure
Europe’s gas inventory levels are currently tracking below historical seasonal averages, entering the crucial period when the region must replenish reserves in preparation for the upcoming winter season. Unexpectedly high consumption of gas for power generation during the previous winter has exacerbated the storage deficit.
Goldman’s commodity research team emphasized that uncertainty regarding the duration of Qatar’s production outage, coupled with continuing threats to maritime traffic through the Strait of Hormuz, will “drive TTF prices temporarily higher still.”
Alternative supply sources are available but face significant constraints. The United States has capacity to expand LNG exports, but energy traders indicate that American production volumes alone cannot adequately compensate for a prolonged absence of Qatari supply.
The Center for Strategic and International Studies informed the New York Times that constrained gas availability in Asian markets could redirect Asian purchasers toward U.S. and other non-Middle Eastern suppliers. Market analysts suggest European prices may continue their upward trajectory even after QatarEnergy resumes normal operations.
Goldman Sachs noted that TTF contracts were trading near their strongest levels since 2023 as of Tuesday morning.
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