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- Europe’s gas prices have eased, but the market may be underestimating risks as supply pressures are likely to intensify in the coming months.
- Low storage levels and disrupted LNG flows—especially from Qatar due to Middle East tensions—are leaving Europe vulnerable as it competes with Asia for limited supply.
- Even with a ceasefire, supply recovery will take months, meaning tight markets and elevated prices are likely to persist through summer and beyond.
Europe’s benchmark natural gas prices have eased from the three-year highs hit in March as reduced rates of withdrawal at the end of the heating season and news of the U.S.-Iran ceasefire calmed the extremely volatile gas market.
But the European market appears too complacent as the real stress test for Europe’s gas supply will unfold in the coming months, analysts say.
The European Commission has warned that energy prices will remain elevated for months to come, regardless of ceasefires or an immediate unconditional reopening of the Strait of Hormuz.
The war in the Middle East and the halt of Qatar’s LNG exports changed the global gas market dynamics and fundamentals overnight, putting Europe at a disadvantage to Asia in the competition for spot LNG supply this spring and summer and well into the autumn, when European countries will have to replenish inventories at gas storage sites.
These inventories have depleted this winter more than last year. As of April 8, the EU gas storage sites were nearly 29% full, according to data from Gas Infrastructure Europe. That’s well below the 35% full level at the same time of 2025.
And the end of the heating season last year didn’t coincide with the mother of all energy market disruptions, the closure of the Strait of Hormuz, which trapped all LNG cargoes, with not a single one leaving the Middle East since the war began on February 28.
The fragile ceasefire had held for less than 24 hours before fresh reports of attacks emerged and Iran signaled it’s closing the Strait of Hormuz again. The uncertainty about the war doesn’t bode well for energy supplies to regions depending on the Middle East for oil and gas. This is mostly Asia, and in the absence of fixed-term LNG supply from the Middle East, Asian buyers are turning to the spot market, outbidding Europe for supply, just when Europe needs it to refill its storage sites.
The Calm Before The Storm
Europe’s gas futures have been relatively calm in recent days, but the market shouldn’t be complacent about the difficult road for Europe in the coming months to refill storage sites, Ole Hansen, Head of Commodity Strategy at Saxo Bank, wrote in an analysis published just before the U.S.-Iran ceasefire was announced.
The ceasefire actually doesn’t have an immediate impact on European gas supply, even if it pushed the benchmark prices down by 20% on Wednesday.
No LNG cargo has transited the Strait of Hormuz in over a month, as two vessels carrying Qatari LNG earlier this week were forced to abandon an attempt to exit the Strait of Hormuz in what would have been the first export of Qatari LNG since the war began.
The tentative reopening of the Strait of Hormuz is also uncertain, with Iran reportedly demanding toll taxes and coordination with its armed forces for safe passage, and unlikely to loosen its grip on the vital chokepoint during the ceasefire and any successive talks.
Despite reduced withdrawals from Europe’s gas storage in March, the underlying risks to European gas supply “remain firmly in place,” Saxo Bank’s Hansen said.
No Relief In Sight
“Once the backlog of pre-closure cargoes has cleared, Europe will become increasingly reliant on alternative LNG sources in an already tightening global market,” the strategist added.
According to Saxo Bank, the recent easing in prices should be viewed with caution because the market has not resolved its supply challenges—it has merely postponed them.
“The combination of delayed disruption, opportunistic LNG resales and favourable weather conditions has bought Europe time - but not security,” Hansen said.
“Europe’s gas market has transitioned from acute stress to temporary relief. But with inventories low and supply risks unresolved, the real test is likely still ahead.
Even with the ceasefire, which, by the way, appears more fragile by the hour, the recovery of gas flows from the Middle East would take months, analysts at Wood Mackenzie said on Wednesday.
“For there to be a real structural change in supply the Ras Laffan site in Qatar would need to restart its 12 operable trains,” Tom Marzec-Manser, Europe Gas and LNG at Wood Mackenzie, commented.
“It is unclear if QatarEnergy would consider doing this during a ceasefire, however.”
Qatar halted all its LNG production on the third day of the war, on March 2, and all its LNG trains to return to operations would likely take until September.
Wood Mackenzie assumes that if QatarEnergy began restarting Ras Laffan at the start of May, it would take all the way to the end of August for the 12 trains to return to full service.
This, of course, is conditional on the Strait of Hormuz finally opening to LNG cargoes, which has not happened yet.
Tight summer LNG and gas markets will make Europe’s task of refilling gas storage sites much more difficult than in previous years.
Oil and gas prices will not return to pre-war levels soon, even if the conflict in the Middle East were to end today, Dan Jørgensen, European Commissioner for Energy and Housing, warned last week.
“We should be under no illusion that the consequences of this crisis for the energy markets will be short-lived. Because they won’t,” Jørgensen said at an informal meeting of EU energy ministers.
“While there are no immediate oil and gas supply shortages for in the European Union, we see tightening in certain product markets, notably diesel and jet fuel, as well as increasing constraints in global gas market and its spill-over effects into electricity prices.”