Gas Stays High as Hormuz Eases

Ships are moving again through the Strait of Hormuz, the narrow Gulf passage that carries roughly a fifth of the world's traded petroleum. According to S&P Global, daily transits rose from fewer than 10 in early March to about 35 by June 22. Since the US-Iran agreement, more than 20 oil tankers carrying around 35 million barrels have crossed the Strait (CNBC).

Oil is moving again. LNG, liquefied natural gas cooled into liquid form so it can travel by specialised tanker, is still constrained. For Europe, including Irish households and businesses exposed to European gas pricing, that is where the risk has settled.

Oil has detours. LNG does not.

The reason starts with the map. Some Gulf crude can avoid Hormuz altogether. Saudi Arabia has a pipeline with about 5 million barrels per day of export capacity, while the UAE has a 1.8 million b/d route that bypasses the Strait (EIA). Oil also has substitutes. If one cargo is delayed, another from West Africa or the Americas can often take its place.

Qatar's LNG export terminals sit behind Hormuz, and there is no pipeline route around it. During the worst of the disruption, no loaded LNG tankers crossed between March 1 and April 24. That cut off more than 10 billion cubic feet per day of supply, enough to move global LNG prices (EIA).

A recovery has begun, though only a partial one. Qatar has started bringing empty ships back through the Strait. In the week to June 19, it loaded about a fifth of its pre-war pace (Energy Connects). Qatar also says a damaged facility will remain offline even as other production restarts (Infobae/EFE).

That is why gas did not follow oil down. Front-month TTF, the Dutch wholesale gas benchmark that shapes pricing across Europe, stood at €40.90/MWh on June 25. Brent crude, by contrast, had fallen to $72.75, wiping out its war-related gains (Dawn/Reuters, CNBC). BNP Paribas described gas's response as "more moderate" than oil's, which is the bankerly way of saying gas prices remain stubbornly high (BNP Paribas).

Why ships can pass but costs cannot fall

A ship being able to pass through Hormuz is not the same thing as a shipping company deciding the voyage makes commercial sense. War-risk premiums, the extra insurance charged for sailing through conflict zones, remain at roughly 3–4% of a vessel's value. Before the war, they were about 0.25% (S&P Global, Allianz Commercial).

As of late June, around 1,150 loaded vessels with a combined cargo value of about $125 billion were still waiting for Gulf passage (Allianz Commercial). Maersk sent two ships out of the Strait but left three inside the Gulf. Companies are deciding voyage by voyage, rather than returning to normal schedules (The Copenhagen Post).

That insurance gap is how a maritime security problem becomes a cost problem. The insurer charges the shipowner more. The shipowner raises freight costs. The buyer pays more for delivered LNG, petrochemical feedstocks and factory inputs. European gas users and industrial buyers sit at the end of that chain.

Cushioned, exposed, or building

The impact is not evenly spread. Germany imports only 6.1% of its crude from the Middle East, but it depends on imports for 67% of its energy (Destatis). The risk to German industry is less an immediate shortage than uncertainty over global prices: buyers cannot be sure when cargoes will arrive or what they will cost. Chemical-industry analysts expect petrochemical feedstocks to normalise only slowly, in some cases not until 2027 (Chemie Technik).

Spain is better cushioned. Its gas storage is above 70%, compared with an EU average of around 46%, and only 1.7% of its supply is directly linked to Hormuz (Europa Press, Energy Aspects). Full tanks protect against a volume shock. They do not protect against market-price risk, because Spain still buys gas in the same European market where the marginal cargo shapes expectations for everyone.

Poland is trying to build its way out of vulnerability. It has 8.3 bcm/year of LNG capacity at Świnoujście and two floating terminals planned by 2030 (GAZ-SYSTEM, gov.pl). Terminal capacity improves resilience. It cannot create LNG that cannot sail.

The chairman of Enagas told Ara that gas-price futures do not point to full normalisation until late 2027 or early 2028. That is a market forecast, not a guarantee. But it is a clearer measure of what reopening really means. Oil has routes around the problem. For gas, the route is the problem.