HSBC Says European Natural Gas Prices May Remain High Until 2027 as War Triggers Supply Shortages

HSBC report shows that due to the Iran war and the closure of the Strait of Hormuz causing supply shortages, European natural gas prices are expected to be 40% higher than previous forecasts in 2026 and will remain high through 2027. In the latest forecast, HSBC states that the European benchmark Dutch natural gas futures price is expected to average $14 per million British thermal units in 2026 and $10 per million BTUs in 2027. HSBC maintains its price forecast for 2028 and beyond at $8.5 per million BTUs. The report notes that about 20% of global liquefied natural gas (LNG) is transported through the Strait of Hormuz, which has effectively been closed since the attack last month. The report states that disruptions to LNG supply will force European countries to pay higher premiums. It also mentions that approximately 26% of LNG in Asia comes from Qatar and the UAE, so these countries will have to compete to find alternative sources. Europe is particularly sensitive to LNG supply shocks because its inventory levels are about 15 percentage points below the five-year average, as previous cold winters increased demand for heating and power generation. In contrast, U.S. natural gas futures prices remain relatively flat due to ample inventories, and U.S. LNG export terminals are operating near maximum capacity, shielding the world’s largest natural gas exporter from global supply shocks. (Sina Finance)