Wood Mackenzie: The global LNG market faces disruption of 80 Mtpa of Gulf supply

The Middle East conflict disrupted 80 million tons per annum of Gulf LNG exports, yet power markets absorbed the shock through fuel diversification.

Month-ahead gas prices have so far peaked at just US$19/mmbtu in April 2026, compared to nearly US$70/mmbtu in September 2022. Wholesale power prices across Europe's five major markets averaged just over €90/MWh in March 2026, largely unchanged from March 2025 and well below the €280/MWh recorded during the first months of the Ukraine crisis.

Data released today by Wood Mackenzie show the supply shock matched the scale of Russia's 2022 curtailment into Europe. Three factors have contained prices: warmer weather left European storage at 28% capacity at end-March, project start-ups added 40 Mtpa of new LNG supply (on an annualized basis) since the beginning of 2026, and China's LNG demand plummeted as the country turned to alternatives.

Spain recorded the lowest wholesale power price at €42/MWh in March 2026, supported by renewables penetration exceeding 60%. Rising solar availability enabled Germany to cut coal and gas generation from 46% in February to 39% in March. Battery storage in Australia increased its share of price-setting from approximately 2% in early 2022 to 20% by late 2025, while gas-fired generation halved from 10% to under 5%.

"The Ukraine war illustrated for Europe the benefits of diversifying away from volatile fossil fuels," said Peter Osbaldstone, Research Director, Europe Power at Wood Mackenzie. "Battery storage and renewables set prices with increasing frequency, reducing the influence of gas. That structural shift insulated power markets when this crisis hit."