US-Iran Tensions Put Europe’s Gas Storage Plans at Risk
Escalating tensions between the United States and Iran are reviving a risk energy markets have long feared: a potential closure of the Strait of Hormuz, the narrow Gulf passage that carries roughly 20 percent of global LNG trade and 25 percent of seaborne oil.
New modelling from energy analytics firm ICIS suggests that a three-month disruption would send European benchmark gas prices sharply higher and strain storage levels heading into winter.
US-Iran nuclear talks are continuing this week after previous meetings failed to produce a breakthrough.
Meanwhile, the US has increased its military posture in the Gulf region, redeploying a carrier strike group to the Northern Arabian Sea. Iranian Revolutionary Guard forces have conducted drills in the Strait of Hormuz and tested a temporary blockage of the sea passage, with officials publicly raising the possibility of closing the route to international traffic.
Oil markets have already begun reacting to the rising geopolitical risk.
Prices climbed to seven-month highs as traders positioned ahead of renewed US-Iran nuclear talks. US crude futures rose to as high as US$67.28 per barrel to start this week, while Brent crude reached US$72.50, its highest level since July 31, 2025, before easing later in the session.
Disruption scenario points to sharp market shock
The ICIS postures that the strategic importance of the strait is difficult to overstate. A prolonged closure would disrupt a quarter of global seaborne oil flows and a fifth of LNG trade. For Europe, the most immediate impact would be the loss of Qatari LNG volumes that transit the Gulf.
To assess the potential impact, ICIS modelled two scenarios: a base case reflecting current market conditions, and a disruption case assuming no contracted Qatari LNG imports to Europe until the end of May—a 102-day halt combined with a 131 terawatt-hour (TWh)reduction in spot LNG volumes over 90 days.
Under the disruption scenario, the Dutch TTF front-month contract, which is Europe’s gas benchmark, would jump toward 92 euros per megawatt hour, averaging around 86 €/MWh during the 90-day blockade.
This price point hovers substantially above the base case and far exceeds the price response in ICIS’ cold-winter scenario, which resulted in roughly a 20 percent increase in some Eastern European markets.
Furthermore, a three-month interruption of Qatari LNG would represent a supply shock of roughly 14 percent during the period, even before accounting for missing spot cargoes.
According to ICIS, that scale of disruption would likely drive the European gas balance into shortage territory.
“We see Europe has simultaneously allowed strategic buffers like gas storage levels to erode to dangerously low levels at a critical moment in global affairs,” said ICIS editor Ghassan Zumot.
Even with elevated prices, not all demand in Central and Eastern Europe could be easily met while still complying with…
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