LNG Prices: Why Hormuz Gas Squeeze Outweighs Oil This Winter

Oil is moving again. Gas is not.

The disruption around the Strait of Hormuz affects oil and liquefied natural gas very differently. For drivers, the oil side has eased slightly. For Europe, the gas side looks like it could last well beyond this winter.

Oil has started to flow again. Middle East crude exports have improved substantially in recent weeks, according to tracking firm Kpler 2. LNG tells a different story. One market analysis reports that no LNG vessel has transited the strait since 12 July 4. That means the International Energy Agency's base case of a reopening in the third quarter of 2026 has not happened 4. Roughly 112 bcm of LNG normally passes through Hormuz each year. That is about 20% of global trade, and around 90% of it is bound for Asia 4. Reuters likewise describes almost a fifth of global LNG exports from Qatar and the UAE as trapped by shipping disruptions 1. The key difference from oil is that those gas exporters have no pipeline bypass 4.

Europe's storage problem

Europe's main vulnerability is its storage, not its direct exposure to the strait. EU gas storage stood at 71.5% on 2 October, compared with 82.6% a year earlier 4. That is the lowest level since 2013 and well short of the 90% target 4. Reuters reports that reserves have fallen to record lows. As a result, European households and industry face at least another year of high prices even if the Iran war ends and the winter is mild, because storage will have to be rebuilt 1.

The price data reflects this. The EU benchmark rose to 83.20 EUR/MWh on 12 October, up 2.17% on the day and about 164% higher than a year earlier 3. Reuters gives a similar figure, saying prices have jumped more than 150% this year 1. The forward view does not offer much relief. Trading Economics models project about 84.72 EUR/MWh by the end of the quarter and roughly 101.74 in twelve months 3. Those are model estimates, not market guarantees, but they show that prices are expected to stay high.

Craig Lowrey, a principal consultant quoted by Reuters, said he could not yet see an end to the volatility. With stocks this low, he said, the effects of the conflict could persist for many more months 1. Europe was already struggling with costs before the crisis. Analysts note that EU gas prices were about three times US levels even before the latest supply shocks, which already strained industrial competitiveness 1.

The oil and gasoline picture

In the US, the effects show up mainly at the pump. The national average for gasoline is $4.36 a gallon, according to AAA. That is about 21 cents lower than a month ago but still 46% above pre-war levels 2. Diesel remains close to an all-time high 2. Analysts quoted by ABC News link the persistence to transport costs and continuing uncertainty. One noted that crude is moving again but at a much higher price than before the attack on Iran 2.

That uncertainty keeps pushing crude higher. Oil prices rose this week on renewed fears of US-Iran escalation, a sharp fall in US strategic crude reserves, and repeated attacks on Libyan oil facilities 5. President Trump said the US could pursue a "massive escalation" if necessary. He also said Iran should pay compensation for damage he attributed to it over the past 50 years 5. Those remarks added another risk to Middle East supply 5.

Where the accounts diverge

The sources differ mainly on how much the strait has reopened. ABC's report of improving traffic 2 might suggest the crisis is easing. The LNG-focused analysis instead describes Hormuz as effectively shut for gas 4. Both can be accurate, because oil tankers and LNG carriers face different conditions and constraints. The danger is that the improving oil figures lead people to overlook the gas problem.

The reading

The headline risk this winter is gas, not oil. Gasoline prices have at least started to fall 2, and crude is moving again, even if it is expensive and sensitive to political rhetoric 25. LNG faces a combination of problems that is harder to fix:

• Qatari and Emirati supply has no alternative route out of the Gulf 4.
• European storage is at a 13-year low 4.
• Prices are forecast to rise rather than fall over the next year 3.

The analysis points to likely winners and losers. Flexible US LNG exporters gain pricing power as the spread over Henry Hub widens. Unhedged European utilities and assets tied to Qatar and the UAE carry most of the downside 4.

If winter turns cold, Europe will be drawing down a smaller buffer while competing with Asia for limited cargoes. Even if Hormuz reopens tomorrow, the refill cycle points to elevated prices into 2027 1. Drivers may feel some relief at the pump, but the costs of the gas shortage are likely to continue for some time.