"Gas War" Escalates: Europe and Asia Bid Up TTF and JKM, Why Has Natural Gas Become the Most Price-Elastic Energy Source?

1. What happened? Strait of Hormuz paralysis causes massive swings in global natural gas prices

1. Sharp Price Fluctuations: Surge in TTF and JKM

Following the outbreak of conflict, benchmark global natural gas prices surged rapidly. The European benchmark Dutch TTF (Title Transfer Facility) natural gas futures prices soared in a short period. Data shows that TTF prices jumped from around €30 per megawatt-hour (or $10.6 per million British thermal units) before the conflict to nearly €60 per megawatt-hour (about $18.8–19.1 per million British thermal units), an increase of approximately 90%. Meanwhile, Northeast Asian spot LNG prices (JKM) also skyrocketed from about $10.5–12 per million British thermal units to $18–26.1 per million British thermal units, a rise of 69% to 148%.

2. Underlying Causes of the Price Surge: Physical Disruption of Core Supply Chains

The main driver behind this surge in natural gas prices is the anticipated physical disruption of the global LNG supply chain. The Strait of Hormuz is a critical hub for global LNG trade, carrying about 20% of worldwide LNG shipping.

More importantly, one of the world’s largest LNG exporters, Qatar, exports over 70% of its LNG through this route, with no alternative maritime route available. By 2025, Qatar’s LNG exports are expected to reach approximately 82 million tons (about 106 billion cubic meters), accounting for nearly 20% of global LNG trade.

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