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Given the supply shock that hit the global liquefied natural gas (LNG) markets as a result of the Middle East conflict, Wood Mackenzie, an energy intelligence group, has pointed out that this disruption, which led to a gas price surge, failed to rattle Europe thanks to its investment in diversified fuels that acted as a shield, insulating it from the Gulf LNG export pause.
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Based on Wood Mackenzie’s analysis, which compared wholesale power and gas pricing across European and Asian markets during the 2022 Ukraine crisis and the 2026 Middle East conflict by examining generation mix changes, LNG supply additions, and price-setting mechanisms between January 2022 and April 2026, the Middle East conflict disrupted 80 million tonnes per annum (mtpa) of Gulf LNG exports.
However, power markets absorbed the shock through fuel diversification, as gas prices have so far peaked at just $19/mmbtu in April 2026, compared to nearly $70/mmbtu in September 2022. The company outlines that 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.
The firm’s data shows the supply shock matched the scale of Russia’s 2022 curtailment in Europe. WoodMac pinpoints three factors that have contained prices, including warmer weather, which left European storage at 28% capacity at the end of March, project start-ups that added 40 mtpa of new LNG supply on an annualized basis since the beginning of 2026, and China’s LNG demand drop as the country turned to alternatives.
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According to the energy intelligence player, Spain recorded the lowest wholesale power price at €42/MWh in March 2026, supported by renewables penetration exceeding 60%, while rising solar availability enabled Germany to cut coal and gas generation from 46% in February to 39% in March. On the other hand, 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%.
As gas prices eased to $15/mmbtu, only 20% above the 2025 average, Italian power prices rose 18%, Germany 5%, the UK 3% year-on-year in March 2026, while average market prices recorded declines in France and Spain of 16% and 22%, respectively.
In addition, Japan’s nuclear plants now constitute 10% of supply, double the 2022 level; the Netherlands reduced coal and gas generation from 49% to 36% between February and March; and Europe’s annual generation from gas has fallen nearly 13% since early 2022.
“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.”
about 2 months ago
Given the supply shock that hit the global liquefied natural gas (LNG) markets as a result of the Middle East conflict, Wood Mackenzie, an energy intelligence group, has pointed out that this disruption, which led to a gas price surge, failed to rattle Europe thanks to its investment in diversified
