Natural Gas— the overlooked energy battleground, Europe’s winter shadow

Compared with crude oil’s surge, the natural gas market has been relatively calm recently. The current price of US Henry Hub natural gas futures (XNG/USD) is about 2.85 US dollars per million British thermal units, rebounding 15% from the March lows, but it is still far below the 2022 peak. The European TTF benchmark natural gas is about €32 per megawatt-hour, and storage levels remain above the historical average.

However, this calm may only be temporary.

The impact of the Middle East conflict on natural gas has two transmission pathways:

1. Qatar LNG transportation risks: Qatar is one of the world’s largest LNG export countries, and the ships exporting to Europe must pass through the Strait of Hormuz or the Red Sea. Trump’s threat to “block the Strait of Hormuz” and the Houthi attacks in the Red Sea have already caused some LNG vessels to be rerouted via the Cape of Good Hope, extending voyages by more than two weeks and pushing up transportation costs and Asian spot prices.
2. Geopolitical substitution effect: If the war in Iran expands, with Israel and Iran attacking each other’s energy facilities, it could affect nearby natural gas fields (such as Iran’s South Pars gas field, which is shared with Qatar). Europe would then have to increase LNG imports from the US, thereby raising US Henry Hub prices.

In addition, in his April 1 speech, Trump mentioned “striking Iran’s energy facilities.” Although his focus is mainly on oil, if Iran’s natural gas processing facilities are damaged, global LNG supply will be further tightened. The latest weekly report from the US Energy Information Administration (EIA) shows that the increase in natural gas inventories in the US mainland was lower than expected, and the upcoming summer air-conditioning demand will gradually increase gas consumption.

From a technical perspective, Henry Hub natural gas has strong support in the $2.60–$2.70 zone. If geopolitical risks heat up or European inventories are depleted faster, prices may break above $3.00 and test the $3.30–$3.50 range. Related underlying assets include UNG (natural gas ETF) and natural gas producers such as EQT and CTRA.

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