(Bloomberg) — European natural gas prices will be a whopping 40% higher than previously projected for 2026 and will stay elevated through 2027 as the Iran war and closure of the Strait of Hormuz set off a supply shortfall, according to a report from HSBC Holdings PLC.
Dutch futures prices, Europe’s gas benchmark, are now expected to average $14 per million British thermal units next year and $10 per million Btu in 2027, the London-based investment bank said in its most recent forecast. HSBC’s outlook for 2028 and beyond remains $8.50 per million Btu.
About 20% of global liquefied natural gas flows through Hormuz, a key waterway that’s been effectively closed since attacks began last month. That disruption to LNG supply will force European countries to pay a significant premium for fuel, the report said. Asian countries, which source around 26% of their LNG from Qatar and the United Arab Emirates, will have to scramble to find alternative cargoes, according to the report.
Europe is particularly sensitive to an LNG supply shock as its storage levels are about 15 percentage points lower than the five-year average after a cold winter drove up demand for the heating and power-plant fuel.
The sharp forecast price increase stands in stark contrast to US natural gas futures, which have barely budged as stockpiles are ample and US LNG export terminals are already operating near maximum capacity, insulating the world’s largest gas exporter from global supply shock.
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