European Gas Prices Hit Three-Year High Amid Strait of Hormuz Disruptions

Natural gas prices in Europe have reached their highest level in over three and a half years due to disruptions in liquefied natural gas supplies from the Persian Gulf. The benchmark European gas contract rose by 4.5% to 76.7 euros per megawatt-hour, or $89.1, as of September 8.

The Strait of Hormuz, a critical waterway for global oil and LNG shipments, has become increasingly turbulent due to rising tensions between the US and Iran. This has led Qatar, one of the world's largest LNG exporters, to suspend shipments and extend force majeure on cargoes headed to European and Asian markets.

The reduced LNG inflows have slowed gas injections into European storage facilities ahead of the winter heating season, leaving them approximately 66% full, below the seasonal average. This makes the European gas market more vulnerable to new supply disruptions and colder-than-normal weather.