The benchmark Dutch TTF gas price has risen from €38 to €54 per megawatt hour since the beginning of the month. That’s a plus of 70%.
Europe approached the crisis in a vulnerable state. Underground gas storage facilities were only 28.4% full as of March 24, noticeably below the seasonal average for the past five years.
Germany is among the most vulnerable. Its storage facilities are only 22.3% full. France is in a similar position – 22.1%. The most critical situation is in the Netherlands. There, reserves have fallen to 6.0% – well below the historical minimum.
At the same time, the contrast with the Iberian Peninsula is striking. Portugal enters the crisis with 85.3% storage capacity, Spain – 55.5%.
Both countries benefit from a more developed LNG receiving infrastructure, a less gas-dependent power sector, and large-scale renewables deployment that has reduced their dependence on fluctuations in wholesale gas prices.
How high can gas prices soar in Europe?
Qatar has confirmed it can no longer fulfill contractual obligations following Iran’s strikes on Ras Laffan. It could take up to five years to restore capacity.
According to Goldman Sachs, which was quoted quoted by Euronews, if the decline in the flow of energy through the Strait of Hormuz drags on for ten weeks instead of six, the average TTF price in the summer of 2026 could exceed 89 euros per megawatt-hour.
If Qatari infrastructure is severely damaged, TTF prices could remain above 100 euros per megawatt-hour for the entire summer.
If shipping through the Strait of Hormuz is blocked for three months, the nearest TTF futures could jump to about 90 euros per megawatt-hour.
In such a scenario, prices could be in the range of 115 to 155 euros per megawatt-hour, as about 28.6 billion cubic meters of LNG would be withdrawn from the world market.
Under a six-month blockade, the average TTF price will approach €160 per megawatt-hour. Quotes could fluctuate between 145 and 240 euros per megawatt-hour.
For comparison, in August 2022, TTF quotes peaked at €345 per megawatt-hour amid Russia’s invasion of Ukraine.
Are things as bad as they were in 2022?
Not yet – and it probably won’t be, believes ABN AMRO head of macro research Bill Diviney.
“The scale of the current shock is unlikely to approach the 2022-2023 energy crisis caused by Russia’s invasion of Ukraine, nor will it affect eurozone economies as evenly as it did then,” he says.
The 2022 crisis was a systemic shock that exposed all the vulnerabilities that Europe had accumulated over decades on the back of cheap Russian gas. The current blow is more pinpointed, more uneven and, at least for now, better managed. The only question is how long it will last.
