Gas price shoots up 25%: The Netherlands extra vulnerable with almost empty gas storage

The European gas price rose by 25% on Monday, the biggest jump since August 2023. The cause: tanker transport via the Strait of Hormuz has virtually come to a standstill due to the escalation around Iran.

The Netherlands could be hit extra hard. The gas storage facilities are currently only 10.7% full.

Strait of Hormuz puts pressure on LNG power

About a fifth of global liquefied natural gas (LNG) exports normally pass through the Strait of Hormuz. Since the weekend, that transport has largely come to a standstill. LNG tankers that were supposed to pick up cargoes in Qatar and the Emirates are postponing their departure or changing their routes. Qatar has temporarily suspended all maritime navigation.

Dutch futures, the European benchmark for gas, were more than 21% higher on Monday morning at 38.72 euros per megawatt hour.

Biggest threat to European gas market since Ukraine war

The situation threatens to be the biggest shock to the European gas market since the Russian invasion of Ukraine four years ago. Europe is at the end of winter and consumption is declining, but stocks are unusually low. Large quantities of LNG will have to be imported in the coming months to fill the storage for the next heating season.

If the Strait of Hormuz remains closed for a month, European gas prices could more than double, according to analysts. That would be a major blow to industry, energy-intensive companies and ultimately households.

The Netherlands runs an additional risk with 10.7% full storage

The situation is particularly precarious for the Netherlands. With only 10.7% full gas storage facilities, there is little buffer if supply stops or prices rise further. A prolonged disruption makes it significantly more expensive and difficult to replenish inventories in a timely manner.

Higher gas prices also affect electricity prices and inflation. The longer the blockade of the Strait of Hormuz lasts, the greater the chance of a new energy crisis.