EU Gas Prices Hit Three-Year High Amid Iran Conflict

European natural gas prices have surged to their highest level in over three years due to renewed US strikes on Iran, which has heightened concerns about prolonged disruption to energy flows from the Persian Gulf. The Dutch front-month futures contract, a benchmark for European gas prices, climbed to 73.85 euros per megawatt-hour in early trading, representing a 25% gain over the past month.

The current storage levels of EU gas stocks are at 63% full, significantly below the 80% average for late August in recent years. According to gas analyst Greg Molnar, continued injection at this pace could leave EU gas storage at just 72 billion cubic meters (bcm), which would be 20% or 19 bcm below the five-year average and mark the lowest storage level since 2013.

This shortage has already impacted regional liquefied natural gas (LNG) exports, with roughly 20% of global LNG shipments crossing the Strait of Hormuz. Analysts at ING predict that competition between Europe and Asia for LNG cargoes will intensify if Qatari volumes remain absent through year-end.