European Gas, the First Barometer of Geopolitical Stress?UK NBP Natural Gas FuturesICEEUR_DLY:GWM1!SwissquoteYesterday, I presented a summary table of the best stock market indicators of geopolitical stress to properly assess systemic risk linked to events in the Middle East. Commodities markets, foreign exchange markets, bond markets, equity markets, maritime transport indicators — all asset classes provide relevant barometers. However, it is the barometers derived from the commodities market that are currently the most sensitive to geopolitical stress. The price of oil is naturally directly impacted by the closure of the Strait of Hormuz, but it is also important to bear in mind that gas supply is being disrupted by events as well. There are numerous natural gas facilities in the region, supplying Europe and Asia heavily via LNG, and the upward impact has been very strong on the so-called European gas price. Admittedly, the upward impact is significantly lower than it was at the outbreak of the war in Ukraine, but potential bullish signals that could move into “out of control” mode must be placed under very high surveillance. Here are the dominant fundamental and technical factors: • Approximately 20% of global LNG trade transits through Hormuz. • In total volume terms (total global gas production), this represents approximately 5–7% of global gas. • Only the portion exported as LNG is truly exposed to Hormuz risk. • The country most dependent on this passage is Qatar, whose nearly 100% of LNG exports pass through this strait. • For oil, Hormuz = ~20% of the total global market. • For gas, Hormuz = ~5% of the total global market, but with a strong impact on European gas prices. Only a portion of global gas is exported in the form of LNG (liquefied natural gas) transported by ships. Approximately 20% of global gas is traded internationally as LNG. And among this LNG trade, around 20% passes through the Strait of Hormuz. The region is primarily dominant in LNG (liquefied natural gas) thanks to Qatar, one of the three largest global exporters, and European gas depends heavily on LNG imported from Qatar. Taking into account real annual volume variations, this results in a range of 5–7% of total global gas genuinely exposed to Hormuz. The region is primarily dominant in LNG (liquefied natural gas) thanks to Qatar, one of the three largest global exporters, and European gas depends heavily on LNG imported from Qatar. The infographic below, issued by the US Department of Energy & CIA, presents the oil and gas facilities in the region concerned by the conflict in the Middle East: From a financial market technical analysis standpoint, there is no red alert yet but WARNING: any massive breakout above the 150 resistance level would generate a bullish signal comparable to the upward impact seen at the outbreak of the war in Ukraine. Among all market indicators sensitive to current geopolitical stress, you must therefore place the price of European gas under very, very high surveillance. The chart below displays weekly Japanese candlesticks of European Gas: DISCLAIMER: This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. If you are a retail investor or lack experience in trading complex financial products, it is advisable to seek professional advice from licensed advisor before making any financial decisions. This content is not intended to manipulate the market or encourage any specific financial behavior. 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