Middle East conflict drives European power price volatility as gas disruption removes 1.5 Mt LNG weekly from global markets in Oil & Companies News 17/03/2026 Gas supply disruption from the Middle East conflict will drive sustained volatility in European power markets, with TTF prices above €50/MWh passing through to electricity prices across major markets, according to Wood Mackenzie analysis published today. While European power is less dependent on gas, the disruption removes approximately 1.5 Mt per week (2.2 bcm) from global LNG markets—equivalent to 19% of global LNG exports. TTF day-ahead gas prices soared above €55/MWh ($18.7/mmBtu) on 9 March following QatarEnergy’s force majeure declaration the previous week. European gas storage sits 10% below last year’s levels following January’s cold spell. Europe’s ability to switch from gas to coal-fired generations in the power sector has declined sharply since 2022, with a 77% gas price increase now reducing gas generation by only 5%. “Europe added 306 TWh of low carbon power supply between 2022 and 2025, reducing fossil fuel dependence and resulting in the contribution of gas and coal falling by 292 TWh,” said Peter Osbaldstone, Research Director, Europe Power at Wood Mackenzie. “But gas generators still set marginal prices on a frequent basis in major markets. When TTF rises €30/MWh, German power prices follow with €40/MWh increases.” Osbaldstone added: “We’ve traded one vulnerability for another. Less overall gas dependence improves energy security. While gas’ role in power price formation varies by country, in Europe’s connected market its influence can be hard to avoid. Losing alternative supplies, such as coal capacity, means gas price shocks hit harder – Europe needs gas generation so it pays the price.” Key Facts: • Strait of Hormuz disruption removes 1.5 Mt LNG per week (2.2 bcm, or 19% of global exports) • TTF day-ahead prices topped €55/MWh on 9 March 2026, up from around €30/MWh pre-conflict • Gas correlation with power prices: R² = 0.97 in Germany, R² = 0.99 in Italy • European gas storage: 10% below 2025 levels after January 2026 cold spell • Low carbon supply share: 66% in 2025, up from 51% in 2022 • 306 TWh low carbon supply added between 2022 and 2025 • Fuel-switching capability in major power markets limited: 77% gas price increase reduces gas generation by only 5% • Potential coal switching capacity: approximately 20 TWh of additional power supply, primarily in Germany Gas sets marginal prices despite reduced power supply share Renewable and low carbon sources now provide 66% of European supply, up from 56% in 2022. Between 2022 and 2025, low carbon supply increased by 306 TWh. Gas and coal’s contribution fell by 292 TWh over the same period. However, gas-fired plants continue setting prices in Italy, Great Britain and Germany as the source remains critical to system balance during periods when the availability of renewables is lower. . While Germany’s share of gas-fired supply has been lower than markets like Italy, Spain and Great Britain, it’s remained quite flat (around 18%) from 2022 to 2025 as nuclear phase-out completed and coal retirement mount. Looking forward, we expect the role of gas in German power price setting to increase towards 2030, as coal retirements continue to mount, a marked contrast to other markets. The limited fuel-switching flexibility locks in the linkage between gas and power prices. Wood Mackenzie analysis shows a 77% increase in gas pri