European gas benchmark TTF rose after renewed tensions in the Persian Gulf and reached its highest level since early April. TTF settled 5.7% higher on the day.
EU LNG imports in April fell from record levels in March, but LNG send-outs stayed seasonally high. This has kept EU gas storage rising, approaching 34% full compared with a 5-year average of almost 46% full.
Market Is Underpricing Gulf Risk
The report says European gas and Asian LNG markets are pricing in too little disruption to supply linked to the Persian Gulf. It adds that the global market has limited options to replace LNG losses from the region.
The report states that rebalancing would likely require further demand destruction caused by higher prices. It says higher prices may be needed to reduce demand enough to match available supply.
The article was produced using an Artificial Intelligence tool and reviewed by an editor.
We are seeing European gas prices climb to their highest point since early April, with front-month TTF futures pushing past €40/MWh. However, the market seems to be underpricing the serious supply risks stemming from new tensions in the Persian Gulf. This suggests that the current price does not fully reflect the potential for disruption.
Low Storage Leaves Limited Buffer
Our vulnerability is clear when looking at storage levels, which are currently near 34% full. This is well below the five-year average of almost 46% for this time of year. Such a deficit provides a much smaller buffer against supply shocks than we have been used to.
The global market is tight, and our increased reliance on LNG since the supply shifts of 2025 makes any threat to producers like Qatar, a top global supplier, extremely significant. We saw during the price spikes of 2025 how even minor disruptions can cause extreme volatility when inventories are low. This current market calmness feels disconnected from that recent memory.
There is very little spare capacity in the global gas system to replace lost volumes from the Persian Gulf. The primary mechanism to rebalance the market would be through demand destruction. For that to happen, prices will need to move significantly higher to force industrial and power sector cutbacks.
