ICIS modelling indicates a three-month Strait of Hormuz closure could push Dutch TTF front-month prices above €90/MWh (US$105/MWh)
With the Strait of Hormuz carrying 20% of global LNG trade and 25% of seaborne oil trade, its narrow passage is a bottleneck for commercial shipping and a geopolitical vulnerability that Iran has military capability to exploit as a retaliatory measure for joint US-Israeli attacks on Iran.
Commodity analysts Independent Commodity Intelligence Services (ICIS) examined how a three-month closure of the Strait of Hormuz could affect European gas pricing in a market analysis, with scenario outputs showing the Dutch TTF front-month rising above €90/MWh (US$105.08/MWh) under a disruption case that removes direct Qatari LNG exports to Europe and cuts spot LNG availability.
ICIS head of energy content Jamie Stewart noted that the impact on military and energy targets from an onging US-Israeli military campaign and Tehran’s retaliatory missile strikes across the region was not fully known at the time of publication.
ICIS pointed out that Iran’s Revolutionary Guards had started drills in the Strait of Hormuz a week before the attack, “already testing a temporary blockage of the sea passage”.
ICIS analysts ran model-based scenarios as recently as Wednesday 25 February to test the repercussions of a three-month Strait of Hormuz closure for supply-demand dynamics in European gas markets.
ICIS gas analytics head Andreas Schroeder noted that an “immediate price impact of the Dutch TTF front-month soaring above €90.00/MWh (US$105/MWh) seems realistic if removing direct Qatari LNG exports to Europe, considering the tightening global LNG balance”.
