European Gas Prices Soar Amid Escalating US-Iran Conflict

European natural gas prices have surged for a third consecutive day due to escalating tensions between the US and Iran, which are jeopardizing energy supplies via the Strait of Hormuz.

The conflict has crippled approximately one-fifth of global supply flows, with shipments through the strait remaining at near-standstill levels. The renewed fighting has dimmed hopes for a near-term resumption of energy exports to Europe.

As a result, European natural gas futures rose by as much as 4.3% on Wednesday before paring some gains. Prices are now near their highest intraday level since January 2023, with the October contract having added around 10% this week.

Tancrède Fulop, a senior analyst at Morningstar, warns that Europe remains structurally vulnerable to another gas shock and is unlikely to see meaningful price normalization until new global LNG supply comes online in 2028. Currently, European gas inventories are only 65% full ahead of winter.