TTF breaks through 70 euros per megawatt-hour, Middle East conflict disrupts Europe's natural gas winter supply security

On Monday, the European natural gas benchmark Dutch TTF price broke above 70 euros per megawatt-hour. Uncertainties over liquefied natural gas (LNG) supplies in the Gulf region have risen sharply, bringing significant upward pressure to the market.

Escalating Middle East tensions, shipping risks in the Strait of Hormuz impact LNG trade

U.S. forces struck an Iranian rocket launch facility near the Strait of Hormuz on Sunday, and Iran subsequently launched missiles at U.S. forces in Jordan in retaliation, further escalating regional conflicts. Approximately one-fifth of global LNG trade passes through the Strait of Hormuz, which is currently effectively closed, directly threatening global LNG export channels.

European gas storage progress falls short of expectations, with practical obstacles to replenishment

Currently is the critical window period for Europe to stock up natural gas for the winter, and LNG imports are of great significance for Europe's energy supply security. Data from the European Natural Gas Infrastructure Association (GIE) shows that the average storage rate of EU gas storage facilities is 64.7%, lower than the level in the same period of previous years.

Continuously rising natural gas prices have slowed down the storage replenishment pace in multiple countries. The market worries that the Netherlands and Germany may fail to meet their gas storage targets by November 1, with the two countries' targets being 80% and 70% respectively.

The root cause lies in the narrowing or even inversion of the price spread between spot gas and winter forward contracts, which makes it difficult to cover the costs and risks of the gas storage link. Under normal circumstances, traders buy gas at low prices in summer for storage and sell at high prices in winter, but the current spread structure has weakened enterprises' motivation to store gas.

A low storage level does not necessarily mean a natural gas shortage will occur in winter, but it will amplify the vulnerability of EU countries in the face of supply disruptions and sharp price fluctuations. Sebastian Heinermann, general manager of the German Gas Storage Association INES, stated that if insufficient gas storage replenishment coincides with a harsh winter, Germany may struggle to fully meet normal natural gas demand; once gas prices soar to the threshold that industrial sectors can bear, enterprises will be forced to cut production, triggering considerable economic losses.

Italy faces delayed Qatar LNG supplies, actively seeking alternative gas sources

Even Italy, which has relatively favorable storage conditions, is suffering from supply disruptions. Media reports show that Qatar Energy notified Italian utility company Edison that due to the U.S.-Iran conflict, the suspension of LNG supplies will extend until early November.

Edison is a core European customer of Qatar Energy, and its long-term contract gas volume accounts for about 10% of Italy's annual natural gas consumption. Edison stated that it is seeking alternative gas sources from multiple parties and has the capacity to ensure gas supply to downstream customers.

Looking at the import structure, the proportion of natural gas directly imported by the EU from the Middle East is not high. Qatar only accounted for 3.7% of the EU's total natural gas imports in 2025, but the supply disruptions in the Gulf still have a strong price transmission effect.

Asia and Europe compete for spot LNG cargoes, Goldman Sachs warns TTF may hit 100 euros

Industry institutions reminded that if the disruption of Gulf LNG exports continues, European buyers will fiercely compete with Asian markets for limited spot LNG cargoes, further pushing up European gas prices.

In its late August report, Goldman Sachs estimated that assuming the recovery of Middle East energy exports is slow and lasts until 2027, and winter temperatures remain at average levels, the Dutch TTF price in December 2026 may rise above 100 euros per megawatt-hour, an increase of about 110% compared to the baseline forecast of 50 euros per megawatt-hour. Correspondingly, the Asian JKM price is expected to reach 35 dollars per million British thermal units.

The report also pointed out that the 100 euros per megawatt-hour price level only appeared during the 2022 European energy crisis. There is great uncertainty about the extent of demand reduction in a high-price environment, and the market may rely on prices to complete the rebalancing of supply and demand again.