Expert analysis
+20–25% Gas Price Increase
What happened?
Iran currently controls the Strait of Hormuz region, and vessel traffic through this narrow maritime passage has largely stopped. In the danger zone, three ships have reportedly been hit by missiles.
Why is this a problem?
The entire volume of Qatar’s LNG exports – about 20% of global LNG trade – passes through the Strait of Hormuz. There is no alternative route. If the strait closes, Qatari LNG shipments to Asia will not slow down – they will stop.
The picture is nuanced by the fact that, although China is by far the largest importer of LNG transiting the Strait of Hormuz, its overall exposure remains relatively limited. The strait accounts for only about 7% of its total gas supply, and the share of natural gas in the country’s power generation mix is relatively low.
In contrast, nearly 65% of LNG imports to Bangladesh, Pakistan, and India arrive through the Strait of Hormuz. Bangladesh and Pakistan are particularly vulnerable to potential LNG supply disruptions, as natural gas plays a significant role in their power generation.
Gas prices are therefore pricing in a physical supply shortage, not merely geopolitical risk.
Expectations
Gas prices are likely to remain high as long as tankers cannot pass through the strait.
A prolonged closure would cause major global trade and economic disruptions, so it is unlikely that transit through the strait can be blocked in the long term. However, at present, no one would dare to bet on how long the disruption may last.
It is already evident that morning “panic buying” pushed prices up by as much as 25% compared to Friday’s close; currently, we are observing an increase of around 20%.
Market volatility is extremely high. The market is closely monitoring geopolitical developments and pricing risk accordingly.
In our expert team’s view, price levels will remain elevated this week; however, the risk premium embedded in prices may decline once the conflict de-escalates.
Due to low storage levels, prices below EUR 30/MWh are unlikely to be sustainable in the medium term. With rising temperatures, the current high price levels are primarily justified by LNG supply risks.
Source: LSEG
Analysis written by: Tóth Eszter Lilla
02.03.2026.