Gulf Ceasefire: Fragile or Firm?

The newly announced Gulf ceasefire is proving exceptionally fragile, with key clauses—such as the inclusion of Lebanese attacks—still unresolved. This uncertainty has stalled vessel movements through the Strait of Hormuz, where insurers demand higher premiums and potential tolls, driving up the cost of any LNG cargo that might attempt the passage. Early reports show only ballast ships slipping by, while fully loaded LNG tankers remain anchored, reflecting the market’s caution amid an ambiguous security environment.

A critical piece of the puzzle is Qatar’s Ras Laffan complex, which supplies roughly one‑fifth of global LNG. The plant has been offline since the conflict began, and analysts estimate weeks to months before production can restart, far exceeding the two‑week ceasefire window. Europe, already grappling with historically low gas storage—its lowest in four years—faces a looming supply squeeze as the missing Qatari volumes cannot be replaced by pipeline imports. With spot prices hovering around €45‑€60 (≈ $49‑$65) per megawatt‑hour, the continent is vulnerable to price spikes if the ceasefire collapses.

Long‑term market dynamics are shifting as well. The loss of two Qatari LNG trains reshapes the global supply curve, tightening the market through 2027 and beyond. While U.S. LNG continues to flow, Asian buyers are offering higher netbacks, pulling cargoes away from Europe and intensifying competition. Forward curves for the TTF remain flat, unlike the backwardated oil market, signaling persistent uncertainty. If the Gulf situation does not stabilize, European gas prices could approach €100 (≈ $110) per megawatt‑hour, echoing the 2022 crisis, and forcing policymakers to accelerate diversification and demand‑side measures.