The price escalation is underpinned by a combination of strained storage levels and persistent supply disruptions from the Middle East. According to data from Gas Infrastructure Europe, EU storage sites were only 74.89% full as of October 29. This figure is significantly below the five-year average of approximately 86% for this time of year, which is critical just before the onset of the heating season. With withdrawals already underway in several countries due to dropping temperatures, further increases in storage levels are unlikely during the coming winter, leaving Europe vulnerable to price volatility.
A primary driver of the recent price spike is the continued disruption of liquefied natural gas (LNG) flows from the Persian Gulf. QatarEnergy extended its force majeure declaration on LNG deliveries to the end of the year, effectively removing a significant portion of term supply from the market heading into winter. Warren Patterson, Head of Commodities Strategy at ING, noted in a Thursday analysis that the market outlook appears “more dire” amid risks of renewed geopolitical instability, including potential US actions following midterm elections. “LNG supply disruptions are creeping deeper into the heating season,” Patterson stated, adding that unplanned outages in Norway have further compounded Europe’s supply concerns.
While Europe struggles with high prices and low storage, the global LNG market is witnessing a structural shift in import leadership. Analysts from ICIS and Kpler estimate that Japan will overtake China as the world’s largest LNG importer this year, a reversal of the trend established in 2023. Japan’s imports are projected at 62 million metric tons by ICIS and 63 million tons by Kpler, while China’s are estimated at 61 million and 62 million tons, respectively. The margin is narrow, but it marks a return to the hierarchy seen in 2022, when pandemic-related lockdowns in China had suppressed its demand.
The reversion to Japanese dominance is driven by divergent responses to the current market tightness. The Strait of Hormuz crisis, which has halted LNG shipments from Qatar and the United Arab Emirates, has driven spot prices in Asia to a four-year high. In response, Chinese buyers acted early to build substantial gas stockpiles. Rystad Energy analyst Xiong Wei reported that as of the end of September, China’s underground gas storage was 80% full. This early stocking strategy has reduced China’s immediate need for spot cargoes, allowing Japan to capture a larger share of the available global supply.
Japan’s strategy has also involved internal fuel switching. During the summer, Japanese utilities reduced gas-fired generation in favor of coal to mitigate the impact of elevated LNG prices. This shift, while reducing domestic gas consumption, highlights the competitive pressure on Japanese energy security. The reduction in Chinese spot demand may provide some relief to other LNG customers in Asia and Europe, who have been locked in intense competition for limited supply that does not transit the Strait of Hormuz. However, with few cargoes able to exit the strait and winter demand rising, the global market remains in a state of tight equilibrium, with prices reflecting the dual risks of geopolitical escalation and physical infrastructure constraints.
The convergence of low European storage, extended force majeure from major Gulf exporters, and shifting Asian import dynamics suggests that the current price environment is not merely a transient spike but a reflection of structural supply risks. As the heating season intensifies, the inability to replenish storage and the continued absence of Qatari and Emirati flows will likely keep pressure on the TTF benchmark. Market participants are now watching for any changes in the force majeure status or geopolitical de-escalation, which could offer the first significant relief to a market that has not seen such high prices since the 2022 crisis.
