The main driver behind the price spike is the disruption to liquefied natural gas (LNG) exports from Qatar, which have been impacted by the conflict since 28 February. According to Independent Commodity Intelligence Services (ICIS), only 26 LNG cargoes have successfully transited east out of the Gulf in this period, compared to the usual 90-100 monthly average. This has forced ICIS to revise its forecast for global LNG supply downwards from 441 million tonnes to 431 million tonnes.
European gas storage levels are currently at a low 54%, down significantly from 64% at the same point last year. With ongoing supply disruptions, European countries may face substantial costs to replenish their stocks, estimated by ICIS at around €54 per MWh this autumn, potentially rising to €60 per MWh if winter proves particularly cold.
The broader energy market has also been affected, with Brent crude oil briefly breaching the $90 a barrel mark on Sunday, its highest level in a month. This followed Iran's confirmation that diplomatic exchanges with the US were continuing despite recent strikes. The Strait of Hormuz, a critical shipping lane through which approximately 20% of global oil and gas passes, remains under threat, exacerbating supply anxieties.
The UK's reliance on international gas markets makes these developments particularly concerning. Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, noted that rising gas prices serve as a stark reminder of the country's connection to international market volatility. The Foreign, Commonwealth & Development Office (FCDO) advises British nationals to monitor travel advice for the Middle East closely due to heightened tensions and potential further disruption.