LONDON

European gas prices surged more than 100% after joint US and Israeli attacks on Iran disrupted shipping through the Strait of Hormuz and forced QatarEnergy to halt production at major liquefied natural gas (LNG) facilities, sharply escalating fears of supply shortages.

Commercial shipping traffic has largely ground to a halt in the Strait of Hormuz, a critical chokepoint that handles about 20% of global liquefied natural gas exports, including nearly all of Qatar’s LNG shipments to international markets.

After Iranian drone strikes targeted energy infrastructure in Ras Laffan Industrial City and Mesaieed, QatarEnergy suspended LNG production at the sites, citing security concerns.

The combination of halted LNG output and disrupted tanker traffic rattled markets, which were already sensitive to geopolitical risk.

At the Dutch Title Transfer Facility (TTF), Europe's most liquid gas trading hub, April futures rose to €65.50 ($76) per megawatt-hour as of 1720 GMT (2.20 p.m. local time).

That compares with a closing price of €31.95 per megawatt-hour on Feb. 27, before the attacks. On the day, prices were up about 47% from the previous session.

Qatar accounts for around 20% of global LNG export capacity, making the shutdown of Ras Laffan and Mesaieed one of the most significant shocks to gas markets since Russia’s invasion of Ukraine in 2022.

QatarEnergy's force majeure declaration has added to uncertainty for buyers with long-term contracts, raising the prospect that some may need to seek cargoes on the spot market.

With the Strait of Hormuz effectively closed, competition between Europe and Asia for alternative LNG supplies, particularly from the United States and Australia, is expected to intensify.

Gas storage levels across the European Union are hovering near 30%, well below levels seen at the same time last year, leaving the region more exposed to further disruptions.

The European Union’s Natural Gas Coordination Group is set to meet on March 4 to assess the impact of the escalating Middle East tensions and evaluate potential response measures.