INTERNAL MEMO — NOT FOR DISTRIBUTION
TO: Anyone still paying attention
FROM: Someone who has been staring at TTF forward curves for six hours
RE: We are doing this again
DATE: March 22, 2026
Europe started this winter with gas storage at 30% capacity. Germany was sitting at 21.6%. France, similar. The continent entered the season already behind, already dependent on spot cargoes, already in the posture of a man who skipped breakfast and is now hoping someone brought snacks to the 2pm meeting.
Then Operation Epic Fury happened.
On February 28, the U.S. and Israel hit Iran. Hard. By March 2, an IRGC official said the Strait of Hormuz was closed. By March 3, Dutch TTF — which had been limping along in the low-€30s — had gapped to over €60/MWh. In two trading sessions. Gas prices nearly doubled in the time it takes Netflix to release a season. And as of this week, TTF is sitting at €61.90/MWh, with the forward curve for summer injection season priced as if Europe is bidding against itself, which it increasingly is.
Here is the problem with the IEA's 400-million-barrel reserve release — the one that was supposed to calm everyone down: the EIA puts global daily consumption at around 105 million barrels. So the release covers roughly four days of global demand, or about 20 days of normal Hormuz throughput. It's a band-aid applied to an artery. It worked, briefly — Brent came off its near-$120 peak and settled around $92/barrel at time of writing. But "settled" is doing a lot of work in that sentence. Up $20 for the month is not settlement. It's the smell of smoke after the fire has moved to the next room.
What's driving the TTF situation specifically is a compounding cascade that the market priced wrong at every step.
Step one: Qatar. On March 2, Iranian drones struck QatarEnergy's Ras Laffan facilities. Qatar supplies roughly 29% of China's LNG. It is also one of Europe's primary LNG sources. The facility shut down immediately. You don't lose Ras Laffan and shrug — Qatar is the second-largest LNG exporter in the world. That's not a supply disruption. That's a supply amputation.
Step two: competition. Europe needs to inject nearly 60 billion cubic metres of gas between now and November to meet the EU's 90%-by-December storage mandate. That injection requirement has to come from somewhere. Most of the somewhere is LNG, and most of the LNG competition is coming from Asia. Japan sources approximately 90% of its crude from the Middle East, almost all through Hormuz. South Korea gets 70% of its crude from the region. China was already scrambling. All three are now in the spot market, cheque books open, and they will outbid European utilities without breaking a sweat because their governments will let them. A US LNG tanker originally bound for Belgium reportedly changed course mid-ocean toward China. That's the market in one sentence.
Step three: summer is not the safe harbour Europe thinks. April injection projections are tracking 77% below last year's levels. By the time winter 2026–27 arrives, Europe could be looking at a second consecutive under-filled storage season. The Atlantic Council ran the numbers: even a ceasefire today doesn't fix the injection math. The damage is already done on the supply side, and the refill race hasn't even started.
The part that should be keeping risk managers up at night — and I say this as someone currently not sleeping — is that Europe's post-2022 energy architecture was specifically designed to prevent this.
After Russia's invasion of Ukraine, the EU moved with unusual urgency. It built out LNG import capacity, diversified away from Russian pipeline gas, signed long-term deals with U.S. exporters, ran the storage filling regulation with genuine discipline. It was, by any fair assessment, a policy success. Storage hit 96% by the start of last winter. The dependence on a single geopolitical adversary was meaningfully reduced.
And then geopolitics moved the risk somewhere else. Not eliminated. Relocated. The bet on LNG diversification was implicitly a bet that the Strait of Hormuz would stay open and that Ras Laffan would stay intact. Both bets are currently losing.
Bruegel's assessment is precise on this: Europe doesn't import most of its energy from the Gulf directly, but it competes with Asia for the same flexible cargoes in the spot market. Price is the transmission mechanism. You don't need a pipeline to Iran for an Iran war to raise your gas bill. You just need to be a price-taker in a market where Asia is suddenly willing to pay anything.
The central bank situation is quietly becoming the most important subplot.
The Bank of England held at 3.75% this week. The BOJ's Ueda flagged that sustained energy prices would worsen Japan's terms of trade while simultaneously lifting domestic inflation — the worst of both worlds, narrated in careful bureaucratic understatement. The Fed is boxed. U.S. headline PPI hit 3.4% year-on-year in February, up from 2.9%. Core is sticky. The 10-year is at 4.39%. Cut into this? Powell would be laughed out of Jackson Hole for the next decade.
Morgan Stanley's estimate is that a 10% oil price increase from a supply shock adds roughly 0.35% to U.S. headline CPI within three months. Oil is up well over 30% from pre-conflict levels. Do the arithmetic. The second-round effects — freight costs, fertiliser, petrochemicals, plastics — haven't fully transmitted yet. They take 4–8 weeks to reach the shelf. When they arrive, the March CPI print is going to be uncomfortable.
The Dallas Fed published modelling this week suggesting that a two-quarter Strait disruption could cut global real GDP growth by 0.3 percentage points. Three quarters of disruption: 1.3 percentage points. These are not catastrophic numbers on their own. But they arrive on top of an economy where Q4 2025 U.S. GDP was 0.7% annualised, where the VIX closed the week at 26.78, where equity markets are printing a fourth straight losing week. You stack a supply shock on a soft patch and you stop calling it a soft patch.
South Korea, for what it's worth, has activated a 100-trillion-won market stabilisation programme — approximately $68 billion — to handle the volatility. Japan is relying on the Middle East for 90% of its crude. These are not peripheral economies quietly absorbing a shock. These are the third and fourth-largest importers of LNG on the planet, in emergency mode, in March.
The question nobody on the buy side wants to answer out loud: what does the LNG cargo market look like in June, when Asia is running air conditioning, the Strait is still functionally closed, European utilities are bidding for summer injection supply, and US liquefaction capacity is already near its ceiling?
I'll tell you what it looks like. It looks like TTF at €80. It looks like the BOE reconsidering that hold. It looks like German industrial output — already in a multi-year hole — taking another leg down. It looks like a winter that Europe enters with storage at 50%, if it's lucky, and a political situation in which any government that raised energy bills three years in a row is fighting for its survival.
None of this is inevitable. A ceasefire changes everything. A diplomatic channel reopening Hormuz next week changes everything. The war could end tomorrow and the LNG market would start breathing again within a month.
But energy policy built on the assumption that geopolitical crises are short-lived is not energy policy. It's a wish.
Europe has spent four years building infrastructure for a world that no longer exists, only to find itself exposed to a different chokepoint controlled by a different adversary. The pipeline dependency became a shipping lane dependency. The geography changed. The underlying vulnerability didn't.
Published March 22, 2026