European Gas Prices Soar Amid Escalating Strait of Hormuz Tensions
European natural gas prices have hit a three-and-a-half-year high due to rising tensions between the US and Iran, disrupting liquefied natural gas (LNG) supplies from the Gulf. The benchmark European gas contract increased by 4.5% to €76.7 ($89.1) per megawatt-hour as of 1720 GMT on Tuesday.
The escalating situation highlights the challenges of reaching an agreement that would allow shipping through the Strait of Hormuz to return to normal, a key route for global oil and LNG supplies.
Iran has warned that energy infrastructure across the region could face further attacks as fighting between Tehran and Washington intensifies. Qatar, one of the world's leading LNG exporters, has halted shipments and extended force majeure on cargoes bound for European and Asian markets through the autumn due to ongoing disruptions in the strategic waterway.
The lower LNG inflows have slowed the rate at which European countries are replenishing gas storage ahead of the winter heating season. EU gas storage facilities are currently around 66% full, below the seasonal average, increasing the European market's vulnerability to additional supply disruptions and colder-than-usual weather.