The situation in the Middle East intensifies supply concerns! European gas prices are expected to reach their highest weekly increase since the energy crisis.

With the ongoing conflict in the Middle East casting a shadow over the global energy supply outlook, European natural gas prices are heading towards their largest weekly gain since the energy crisis. Data shows that as of the time of writing, the European benchmark Netherlands TTF natural gas futures fell over 2% on Friday to 49.45 euros per megawatt-hour, but are still expected to accumulate an increase of over 50% this week. However, current European natural gas prices are still far below the record levels set during the energy crisis - the highest level in history exceeded 300 euros per megawatt-hour. Meanwhile, the implied volatility of European benchmark natural gas futures - a measure of the related options' costs - has risen more than fourfold since the beginning of 2026, currently nearing the highest levels since the summer of 2023. The conflict in the Middle East has entered its seventh day, with no signs of easing. Disruptions in oil and natural gas transport through the Hormuz Strait have raised concerns about energy supply shortages and increasing inflation pressures, especially in Europe. The European natural gas market is particularly vulnerable as the region's winter heating season has just ended and natural gas stocks have been significantly depleted. This means that Europe will need to purchase more liquefied natural gas this summer to replenish its stocks. Amid the impact of the conflict, Qatar has temporarily suspended liquefied natural gas production. Qatar is the world's second-largest exporter of liquefied natural gas, and nearly 20% of global liquefied natural gas supply comes from Qatar, with exports having to pass through the Hormuz Strait. Currently, ship transport through the Hormuz Strait is almost completely stalled, leading to dozens of oil tankers and gas vessels loaded with oil and gas being forced to stay in the Persian Gulf. Market analysts have stated, "If the Hormuz Strait is blocked, nearly 100 million tons of liquefied natural gas trade per year could face a risk of interruption, enough to reverse the potential oversupply situation in the global liquefied natural gas market after 2027. If supplies from the Middle East cannot enter the global market, Europe will compete with Asian buyers for limited energy supplies. Analysts like Irene Himona of Bernstein wrote in a report, "If you want a ship carrying natural gas from the US to arrive in Berlin, you will have to offer a high enough price to 'snatch it' from its original route heading towards Tokyo."