Price shock caused by Iran war

Soaring gas prices: How industry must respond now

The Iran war is tightening LNG supply and gas prices are surging. Industry is facing a second gas price shock within four years. What companies should do now.

Dörte Neitzel Dörte Neitzel Dörte Neitzel Editor TECHNIK+EINKAUF

Published March 3, 2026 - 1:26 p.m.

LNG tanker: Qatar has initially suspended production of liquefied natural gas.

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“There is no cause for concern,” Federal Minister for Economic Affairs Katherina Reiche reassured back in February when she was asked whether the fill levels of German gas storage facilities were too low. Supply was secured through the import of liquefied natural gas. She ignored the escalation in the Gulf region that was already emerging at the time due to the threats from the U.S. president. Even in the “Report from Berlin” on March 1, 2026, Reiche still said that Germany’s LNG supply was secure and that the blockade of the Strait of Hormuz by Iran would not affect Germany.

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What Reiche meant: Germany in fact does not obtain its natural gas and LNG from the Gulf region. Pipeline gas comes mainly from Norway as well as from Belgium and the Netherlands, and last year Germany imported 99% of its LNG from the United States. There is therefore no immediate supply shortage in sight, but indirectly there is indeed a drastic price effect.

Tighter supply, gas price shoots up

At the Amsterdam trading hub, the key TTF futures price for gas (delivery in May) jumped on Monday (March 2, 2026) to 45.32 euros per megawatt hour - around 44 percent more than on Friday. Several effects are responsible for the sharp reaction:

Bottleneck Strait of Hormuz: Iran has effectively blocked the Strait of Hormuz and is attacking oil tankers with drones. As a result, numerous oil and LNG tankers are stuck in the region and are not reaching their destinations. Since around one fifth of global LNG trade has to pass through the strait, the impact is felt worldwide. If market participants perceive this bottleneck as unsafe or if it is actually blocked for a longer period, LNG is quickly priced in as scarce. The most important exporters of liquefied natural gas in the Gulf region are Qatar, Oman, and the United Arab Emirates. Saudi Arabia is in the process of massively expanding its production.

Halt to LNG production in Qatar: In addition, Iranian bombs have damaged Ras Laffan, the largest LNG production facility in northern Qatar, and the operator Qatar Energy has halted production. LNG is also no longer being produced for the time being at the Mesaieed plant south of the capital Doha. This has consequences, as about 19% of global LNG exports come from Qatar. The country supplies around 80% of its LNG to Asian countries such as China, Japan, and South Korea; in Europe, until now only the United Kingdom and Italy have bought Qatari liquefied natural gas. From 2026, Germany will also be among the countries supplied. Up to 2 million tonnes of LNG per year are to be sold by Qatar Energy to the US company ConocoPhillips, which in turn will deliver it on to Brunsbüttel. The contract was concluded for a minimum term of 15 years.

Low storage levels: The risks are exacerbated by the relatively low gas storage levels, at least as a psychological effect. Across Europe they are currently below 31% (compared with 40% in the same period last year); in Germany they are just under 20% (as of 3/3/2026). These gas storage facilities are intended to compensate for possible import shortfalls or supply disruptions.

Impact of the gas price shock on industry

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Bloomberg fears that the Iran war will massively shake up the international gas market; it could be the most severe shock since Russia’s attack on Ukraine. At that time, Russia accounted for 20% of the global natural gas market; today, Qatar accounts for 20% of the liquefied natural gas market. And even though the dependence of German industry on a single supplier country (Russia) was still much stronger four years ago, it is clear that industry in this country is still heavily affected today, even with a diversified gas supply structure.

For industry, gas is both a raw material and an energy source. The price surge therefore hits not only, but especially, energy-intensive companies. In particular, the chemicals, glass, ceramics, metal, paper, and food industries can find even a brief price shock very costly. This applies all the more to companies that have to procure their gas at short notice (spot/front-month), are only partially hedged, or whose contracts are indexed and therefore pass on price movements with a short delay.

Gas, however, is only one of the dominoes. The effects on oil and fuels quickly become visible to consumers – especially at the pump. An analysis by dpa in Wirtschaftswoche illustrates the jump in concrete terms: on Monday afternoon, E10 cost 7.3 cents more per liter than on Friday, and diesel was even 8.1 cents more per liter. ADAC expert Christian Laberer warns that if the oil price does not fall quickly, the upward trend could continue over the next few days. Falling oil prices, on the other hand, typically reach the pump more slowly. For heating oil, the spike was even more drastic: Heizoel24 temporarily reported over 120 euros per 100 liters, whereas on Friday the price was still well below 100 euros.

How should companies respond to the soaring gas price now?

In the short term, most companies are largely helpless in the face of the price shock, except that they can perhaps lower the temperature in buildings and optimize processes. If long-term supply contracts have been concluded, the effects are not initially noticeable. Those that rely on short-term procurement, however, should diversify their portfolio now at the latest – in other words, hedge short- and long-term contracts. Different suppliers within a multisourcing strategy can also cushion part of the impact of a price shock.

In the medium to long term, while the raw material natural gas itself cannot be replaced, the energy source natural gas can be substituted with alternatives that mean less dependence and therefore fewer potential price shocks. These can be hybrid systems (heat pump with gas boiler for peak consumption), connection to district heating, or the use of waste heat/process heat. Above all, generating heat from electricity using a heat pump has the advantage that the required electricity can largely be produced in-house.

FAQ – gas prices in industry

Why are gas prices rising so sharply right now?

The TTF gas futures price jumped to 45.32 euros per megawatt hour on March 2, 2026 – an increase of around 44 percent compared to the previous Friday. This was triggered by the de facto blockade of the Strait of Hormuz by Iran and by bomb attacks on Qatar’s Ras Laffan LNG production facility. Since around one fifth of global LNG trade passes through this strait and Qatar supplies about 19 percent of global LNG exports, supply is being priced in as tight worldwide.

Is Germany directly affected by gas delivery failures?

No, not directly. Germany sources its pipeline gas mainly from Norway, Belgium, and the Netherlands, while 99 percent of imported LNG comes from the United States. There is therefore no acute supply emergency. Nevertheless, German industry feels the price shock indirectly, because the gas market is globally interconnected and scarcity in one place pushes up prices everywhere.

Why are low gas storage levels a problem?

Gas storage facilities are intended to cushion supply disruptions and import failures. At present, European storage facilities are below 31 percent – in the same period last year they were still at 40 percent. In Germany, the fill level is even only just under 20 percent. These low reserves significantly exacerbate the risks, because there is hardly any buffer available to absorb a prolonged outage.

Which sectors are hit hardest by the gas price shock?

Energy-intensive industries such as chemicals, glass, ceramics, metals, paper, and food are particularly hard hit. For these companies, gas is both a raw material and an energy source. Companies that have to procure gas at short notice on the spot market, are only partially hedged, or have indexed contracts feel price movements particularly quickly and directly.

What can companies do in the short term to counter the price increase?

In the short term, options are limited. Those relying on spot procurement should now diversify their portfolio and combine short- and long-term contracts. A multisourcing strategy with various suppliers can cushion part of the impact. In addition, processes can be optimized and building temperatures reduced – there is hardly any more room for maneuver in the short term.

How can dependence on gas be reduced in the long term?

In the medium term, companies can replace gas as an energy source with alternatives: hybrid systems that combine a heat pump with a gas boiler, connection to district heating, or the use of waste heat are suitable options. Heat production via heat pumps is particularly attractive, as a large part of the required electricity can be generated in-house – which permanently reduces dependence on external price developments.