The impact of Hormuz on natural gas pricing in the U.S.

Since the war with Iran began on February 28, the global balance of energy has been in a constant state of flux.  The primary reason has been the ability of Iran to effectively choke off a primary energy supply route and pinch point called the Strait of Hormuz, which prior to the war, provided a pathway for ~20% of all global crude oil and ~20 of global LNG trade.   

Europe is a net importer of both crude, distilled products, and natural gas. So, it is not surprising the price of Brent crude oil and natural gas has skyrocketed.  The November 2026 Brent contract is up $38.23 per barrel since February 27, 2026, while the same November ’26 contract for the U.S. WTI benchmark showed a similar trend, up $30.59 per barrel from pre-war pricing and trading at $94.73/bbl (intraday 9/24).  

European natural gas pricing has a similar trend with the wholesale natural gas TTF benchmark trading at $24.65 per MMBtu (€73.78/MWh) intraday 9/24, over double the pre-war price of $11.07/MMBtu (€33.13/MWh).  The world’s second largest exporter of LNG is Qatar, which has no other option but to flow its LNG through the Hormuz to get to market, and has had very little of its LNG supply available to the market since March. 

Shown below is a chart that shows the number of LNG vessels and the 30-day moving average (red line) flowing through the Strait of Hormuz over the past year.  It is obvious to see the impact of the war on global LNG supply and the resulting increase in price around the world.  Prior to the war, an average of 5.8 LNG vessels were passing through the Strait of Hormuz. Except for a period during a short lived ceasefire from mid-June to mid-July when a handful of cargoes traversed through the waterway, the number of LNG traffic through the strait has been nearly non-existent. While Europe historically received  little LNG from Qatar, the removal of a substantial amount of supply from the market has traditional buyers of Qatari LNG in Asia competing for remaining molecules from traditional European suppliers. 

Besides the risk of total loss, part of the reason for the small amount of LNG traffic has to do with the total number of LNG vessels that exist in the world, which is ~750.  Compared to the number of existing crude oil vessels, which are between 7,000 and 8,000, the loss of a single LNG vessel would impact the existing supply chain more significantly.  The other risk is the initial investment and ongoing revenue stream of an LNG tanker. Each of these specialized cryogenic, highly insulated ships cost between $180-$250 million to build and have commanded daily carrier rates of between $70k-$220k recently. Each one an asset that cannot be easily replaced.   

The result on U.S. natural gas prices at the Henry Hub has seen a very different reaction. Prompt month price of natural gas on February 27, 2026, was $2.85/MMBtu (€8.53/MWh). On September 24, prompt month NYMEX closed at $3.297/MMBtu (€9.87/MWh). A very minimal impact domestically. The question is why? There are several drivers causing the difference between the European and U.S. gas markets some of which are listed in the table below along with the directional impact on natural gas prices. 

While these markets are connected and continue to evolve, they are very different in market structure, price levers, regulation and geopolitical risks. Failure to recognize these differences can create additional risks and opportunities for companies that operate within or have business relationships with entities in these regions.