European Gas Prices Soar Amid Iran Tensions and Storage Deficits
European natural gas prices rose by 2% on Monday to hover near multi-year peaks as tensions in the Persian Gulf escalated and storage deficits persisted. The price of European natural gas traded at around 73.80 euros per megawatt-hour (MWh), just below its peak of 74.32 euros reached last week.
The surge reflects a growing geopolitical risk premium embedded across European forward curves, as traders re-evaluate winter supply security following fresh kinetic strikes and shipping threats along critical Middle Eastern energy corridors.
Tehran has threatened to declare a restricted zone outside the Strait of Hormuz, which handles roughly one-fifth of global liquefied natural gas (LNG) traffic. This prospect threatens to choke off a vital supply artery to Europe, with European utilities forced to bid aggressively for uncommitted Atlantic basin LNG cargoes.
The storage injection deficits exacerbate winter vulnerability, as regional storage facilities filled to approximately 62% of capacity, trailing the five-year seasonal average by roughly 17 percentage points.