This blogpost is authored by Chi Kong Chyong, CERRE Research Fellow and Senior Research Fellow in Energy System Economics and Modelling at the Oxford Institute for Energy Studies.
On 3 March, the front‑month TTF gas futures contract briefly traded around €65/MWh, with prices having more than doubled since the previous Friday[1]. The trigger was an escalation of conflict in the Middle East, which disrupted tanker traffic through the Strait of Hormuz. Following an Iranian drone attack, QatarEnergy temporarily halted LNG production at the Ras Laffan export complex, which accounts for roughly one‑fifth of global LNG supply [2]. By the end of the week, benchmark TTF futures were on track for their largest weekly gain since February 2022, with prices up by more than 50%.[3] The following day, the European Commission convened the Gas Coordination Group and confirmed that it observed “no immediate security of supply risks.”[4]
Prices doubling while physical supply holds is not an anomaly. It is the defining feature of stress in liberalised energy markets, and it is precisely the challenge I address in my paper, Resilience to Price Shocks in Coupled Gas-Electricity Markets[5]. The central argument is that Europe’s energy security framework was built to prevent physical interruptions but lacks the tools to manage the extreme price episodes that now do most of the economic damage.
Price stress without shortages
The 2021-2023 crisis showed that in liberalised energy markets, severe stress plays out less through rationing than through extreme wholesale prices, demand destruction, and emergency government spending. Europe largely kept the lights on, but at enormous economic cost. The experience confirmed a basic feature of how coupled gas and electricity markets work: when gas-fired power plants set the electricity price and several problems hit at the same time (tight gas supply, cold weather, low wind and solar output), prices do not rise in proportion to the shock. They rise much faster. And when conditions ease, prices come down more slowly and by less.
The parallels to the current moment are uncomfortably close. If the Middle East conflict persists (e.g., for 1 year), the global LNG market will tighten permanently, removing at least 20% of global LNG supply and delaying new capacity from Qatar’s North Field expansion. Europe would then enter the summer storage refilling season, needing to rebuild stocks from historically low levels while competing for scarce LNG cargoes at elevated prices. Add to this the kind of supply-side problems that appeared in 2022 in Europe, such as reduced nuclear power availability, a dry summer limiting hydropower across southern Europe, or a long spell of low wind, and the compounding begins. Each additional constraint does not simply add to the price effect. As my stress-test modelling shows, prices rise sharply when multiple problems occur simultaneously.
This is precisely the type of compound shock that my paper argues Europe’s security framework must learn to anticipate and stress-test as a matter of routine, not piece together after the damage is done.
LNG dependence: from one concentration risk to another
A central finding of my modelling is that, going forward, without Russian pipeline supplies, LNG becomes the main additional gas source when the system is under stress. It accounts for up to 90% of incremental imports during cold winters. Europe’s post-2021-23 crisis energy system is, in effect, dependent on LNG at the margin. Yet the EU’s gas security framework, built around the N-1 infrastructure standard, tests only whether pipelines, terminals, and storage facilities can physically deliver gas after the loss of the single-largest piece of infrastructure. It tells us nothing about what happens to prices when the remaining supply is concentrated among a small number of exporters and sold on volatile global spot markets.
Since 2022, Europe has cut Russian gas imports by roughly 75%[6]. But the replacement has not amounted to genuine diversification. EU imports of US LNG quadrupled between 2021 and 2025, reaching an estimated 81 billion cubic metres[7]. Thus, 57% of EU LNG imports now come from the United States, and under contracts already announced, this share could reach 75-80% by 2030.[8] A system that passes the N-1 infrastructure test can still produce extreme price spikes if its marginal supply is concentrated, indexed to spot prices, and exposed to global competition in tight markets.
In my paper, I propose an Energy Price Resilience (EPR) metric designed to capture this kind of vulnerability. It replaces the standard peak-day gas demand benchmark with one that reflects the combined stress on gas and electricity systems during adverse conditions. It adds a price-exposure adjustment that accounts for the amount of gas bought on spot markets, the concentration of the supplier base, and the tightness of global LNG markets. And it brings electricity adequacy into the picture, recognising that when power-sector gas demand surges during low-wind or cold periods, electricity scarcity can, in turn, drive gas prices higher.
More renewables, not less marginal pricing
The debate over EU electricity market design has reignited. Commission President von der Leyen has signalled that options for market reform will be presented to the European Council on March 19-20.[9] In response, the Eurelectric Presidency wrote to EU Heads of State, urging them not to reopen a reform concluded barely a year ago, warning that regulatory instability would discourage the more than €5.6 trillion in power-sector investment needed by 2050.[10]
My paper reaches a compatible conclusion, though from a different angle. I treat marginal pricing as a core feature of liberalised markets, not something to be redesigned. The price spikes observed this week reflect expectations about scarcity transmitted through the pricing mechanism, not a breakdown of market design. Proposals to replace or abolish marginal pricing do not eliminate scarcity. They shift its costs around and, more importantly, they weaken the investment signals that underpin the structural solution.
That structural solution is more renewables, built faster. My modelling makes this point clearly. When wind and solar deployment accelerate to reach higher capacity targets, gas demand in the power sector falls substantially, gas prices drop by up to 50% even in the most stressed scenarios, and the link between gas price shocks and electricity prices weakens because gas sets the electricity price in fewer hours. Weakening marginal pricing would slow down precisely this kind of investment, keeping Europe more dependent on gas at the margin for longer. The path to lower and more stable energy prices runs through faster decarbonisation within the current market framework, not through overhauling it.
What should happen at the European Council?
Three steps would bring Europe’s security framework closer to the risks it actually faces.
First, the Commission should develop a common set of gas and electricity stress scenarios and build them into revised risk-assessment methods under Regulations 2017/1938 and 2019/943. This is the minimum step needed to make price vulnerability visible in official assessments.
Second, the EPR metric I propose, or a functionally similar metric, should sit alongside the existing N-1 standard and the European Resource Adequacy Assessment. A system that looks adequate under today’s tests can still produce extreme price outcomes when compound shocks coincide with concentrated LNG procurement and low storage. This week is the proof.
Third, storage governance should become smarter. Rigid filling deadlines risk creating predictable buying pressure that unnecessarily pushes up summer gas prices and distorts forward markets. Storage is fundamentally a tool for moving energy from one period to another, not an additional supply source. Its regulation should reflect actual system conditions and credible weather-based risk assessments, rather than fixed calendar targets applied regardless of market conditions.
Energy price resilience does not mean eliminating scarcity pricing. It means reducing the conditions under which small shocks produce outsized price reactions, and measuring price risk with the same seriousness Europe applies to keeping the physical system running. The events of this week suggest that the gap between these two goals remains wide.
[1] https://www.argusmedia.com/en/news-and-insights/latest-market-news/2795516-european-lng-prices-highest-since-energy-crisis
[2] https://www.bloomberg.com/news/articles/2026-03-02/european-gas-rallies-more-than-30-as-qatar-halts-lng-production
[3] https://tradingeconomics.com/commodity/eu-natural-gas/news/531246
[4] https://energy.ec.europa.eu/news/commission-and-eu-countries-confirm-no-immediate-oil-or-gas-supply-concerns-following-disruptions-2026-03-04_en
[5] https://cerre.eu/publications/resilience-to-price-shocks-in-coupled-gas-electricity-markets/
[6] https://energy.ec.europa.eu/strategy/repowereu-phase-out-russian-energy-imports_en
[7] https://www.lngindustry.com/special-reports/19012026/ieefa-eu-risks-new-energy-dependence-as-us-could-supply-80-of-its-lng-imports-by-2030/
[8] https://www.industrialinfo.com/news/article/eu-swaps-russian-gas-addiction-for-us-lng–354023
[9] https://www.bloomberg.com/news/articles/2026-03-01/power-lobby-warns-eu-s-von-der-leyen-not-to-tamper-with-market
[10] https://www.eurelectric.org/news/eurelectric-urges-eu-leaders-safeguard-electricity-market-design/
