General – Geopolitical Tensions
Recent movements in European gas markets point to disruption caused by geopolitical tensions, but analysts say the situation is unlikely to escalate into a full-scale energy crisis similar to that of 2022.
Dutch energy analyst Jilles van den Beukel recently outlined his observations in a personal commentary following the surge in gas prices linked to military tensions involving the United States, Israel, and Iran.
According to Van den Beukel, the rise in gas prices has been far sharper than the increase in oil prices. The difference, he notes, lies partly in market structure. Unlike oil — for which strategic reserves have existed since the 1970s — natural gas lacks large-scale strategic stockpiles. Gas storage facilities are primarily designed for seasonal balancing, storing supply in summer to meet higher winter demand. While these reserves may offer a limited strategic buffer, their main function is seasonal rather than geopolitical.
Van den Beukel also addressed the reported halt in LNG production at Qatar’s Ras Laffan facilities. While Qatari authorities have cited drone attacks as the reason for the disruption, another logistical factor may also be at play. If LNG transport were to stop entirely, the maximum storage capacity at export terminals such as Ras Laffan could be reached within just a few days, forcing production slowdowns regardless of security concerns.
Markets expect temporary shock
Current price dynamics suggest markets are pricing in a disruption — but not a prolonged one. If traders expected a long-lasting supply shock, Van den Beukel argues, benchmark European gas prices at the Dutch TTF hub would likely be closer to €100 per megawatt-hour.
Instead, longer-dated TTF futures contracts — covering deliveries for the coming summer and the winter of 2026–2027 — have risen far less sharply. This indicates that market participants do not expect a repeat of the 2022 gas crisis.
In Van den Beukel’s assessment, investors appear to believe that either the conflict will de-escalate relatively soon, or — perhaps more likely — that the United States will succeed in reducing risks to shipping through the strategically vital Strait of Hormuz within a manageable timeframe.
Global LNG market tightness still matters
Europe’s limited reliance on Qatari LNG offers little insulation from global market pressures. Because of shorter shipping routes, most LNG imports into the European Union come from the United States rather than Qatar. Nevertheless, disruptions anywhere in the global LNG system tighten the worldwide market and push prices higher everywhere.
The strong correlation between Asian JKM prices and Europe’s TTF benchmark, Van den Beukel notes, “is here to stay.”
Some mitigation is possible when LNG purchases are contractually linked to the U.S. Henry Hub gas benchmark or indexed to oil prices. Such arrangements are more common in Asia than in Europe. Asian markets also retain greater flexibility to switch from gas to coal in power generation — an option far more limited in the EU.
“If anything,” Van den Beukel suggests, “Europe may once again feel more of the pain from high gas prices than Asia.”
U.S. LNG expansion provides buffer
One factor helping to moderate the price surge is the rapid expansion of global LNG capacity, particularly in the United States. Despite concerns in Europe about growing dependence on American LNG — especially under the administration of Donald Trump — this additional supply has helped contain price spikes.
Without the recent growth in U.S. export capacity, Van den Beukel argues, the increase in European TTF prices would likely have been far more dramatic.
However, expectations of a rapid supply response should remain modest. LNG export plants typically operate close to full capacity year-round. In practice, the only operational flexibility lies in shifting maintenance schedules rather than significantly increasing output.
For now, the market appears to be pricing in disruption — but not disaster.
