Persistent supply risks in the Persian Gulf continue to tighten global liquefied natural gas markets, lifting prices and clouding Europe's winter storage outlook, the Oxford Institute for Energy Studies said Wednesday in its Quarterly Gas Market Review.
The institute said that hopes that the June ceasefire between the US and Iran would lead to a lasting diplomatic breakthrough have faded. Continued attacks have delayed any meaningful recovery in Persian Gulf LNG exports.
Security concerns in the Strait of Hormuz remain the biggest obstacle to restoring exports. The report said an attack on Nakilat's Al Rekayyat LNG carrier on July 7 left the vessel disabled off Oman after an engine room fire.
OIES said Qatar could quickly restore production at Ras Laffan once conditions improve, but continued conflict leaves little prospect of significant Qatari or Emirati LNG supply returning before autumn.
Steady North American LNG production has failed to loosen global balances because Persian Gulf supply remains constrained.
Elevated benchmark prices and a backwardated forward curve have also slowed European gas storage injections.
Asian buyers continued to outbid European utilities for spot and flexible LNG cargoes as El Nino-driven heat lifted electricity demand for cooling, the report said.
Despite elevated prices, LNG imports increased in India, Bangladesh, Thailand, Vietnam and the Philippines, while China and major North-East Asian importers largely stayed out of the spot market, according to the report.
Europe recorded stronger cooling demand during record summer temperatures. Weather-related swings in renewable generation, hydro output and nuclear availability increased gas-fired power demand.
Gas accounted for 19% of Europe's electricity generation during the second half of June, up from an average of 13% in Q2, the report said.
OIES added that renewable energy growth will continue to reduce overall gas-fired generation, but weather-driven demand swings will keep gas use increasingly volatile.
The report said the European Union now has little chance of meeting even its least demanding gas storage target this year because non-power gas demand has remained broadly unchanged.
European and Asian benchmark gas prices remained elevated and volatile during Q2 2026.
TTF climbed from about $13.50 per million British thermal units in mid-April to above $17.50/MMBtu in mid-May before returning to around $13.50/MMBtu in late June, while Argus North-East Asia followed a similar path, the report said.
The report said benchmark prices also peaked on March 19-20 after QatarEnergy confirmed Iranian strikes had damaged two of 14 LNG trains at its Ras Laffan export complex.
Forward prices continued to reflect supply uncertainty. TTF Q3 contracts stood at $16.26/MMBtu on April 1 before easing to $14.30/MMBtu on June 29, while retaining a slight backwardated curve. Argus North-East Asia forward prices showed a similar trend.
The institute said constrained Persian Gulf LNG supply, resilient Asian buying despite high prices and Europe's seasonal storage demand kept prompt and summer 2026 gas prices elevated.
OIES said a delayed recovery in Gulf supply could lift prices in Q4 if disruptions persist through winter, especially if European storage remains below average.
Traders should monitor European storage, Gulf supply, non-Gulf production growth and non-European LNG demand during Q3 2026, according to OIES.