European Gas Prices Jump on Strait of Hormuz Security Fears
European natural gas prices surged to their highest point in two weeks, reaching above €76 per megawatt-hour (MWh) on Monday. The rise comes amid growing security concerns around the Strait of Hormuz, a critical route for liquefied natural gas (LNG) from the Persian Gulf. Recent attacks on vessels in the strait have raised alarms over the safety and reliability of shipping, which has historically handled about a fifth of global oil and LNG trade.
Despite some Gulf LNG cargoes still passing through the strait, the volumes remain insufficient to ease global supply tightness. Adding to the pressure, QatarEnergy has extended force majeure on LNG deliveries to Italy’s Edison through December, further tightening supply. Europe is now in a race to replenish its gas reserves before winter, with storage levels currently at around 72% of capacity, significantly below the five-year seasonal average of 87%.
The lagging inventories mean any prolonged disruptions or an unexpected cold start to the heating season could exacerbate market tightness and push prices even higher. As the situation unfolds, the European gas market remains on edge, balancing between supply constraints and seasonal demand pressures.