European Gas Prices Soar Amid Strait of Hormuz Tensions
The European gas market is experiencing a surge in prices due to rising tensions between the US and Iran, which have disrupted liquefied natural gas (LNG) exports through the Strait of Hormuz.
The Dutch TTF benchmark for European gas rose above EUR70 per megawatt-hour on Monday, with a 5% increase in mid-session prices. This is a concerning trend for Europe, as it rebuilds its gas inventories ahead of winter. The EU's storage sites are only 64.7% full, leaving stocks below typical levels for this time of year.
The escalation between the US and Iran has raised concerns about further disruptions to LNG exports, which carry one-fifth of global trade through the strait. This is particularly worrying for Germany, where Sebastian Heinermann, managing director of the German gas-storage association INES, warned that if storage levels stay low and winter turns severe, Germany might not fully meet normal gas demand.
Italy's storage levels are among the highest in Europe, but it too is exposed to supply risks. QatarEnergy has informed Italian utility Edison that it will prolong its force majeure halt on LNG deliveries until early November due to the US-Iran conflict. This long-standing deal covers roughly 10% of Italy's yearly gas consumption.
Analysts caution that an extended halt in Gulf LNG exports might push European buyers to bid more fiercely against Asian counterparts for available cargoes, adding further upward pressure on prices. Goldman Sachs analysts Samantha Dart and Laura Cyr predict that if Middle East energy exports recover only slowly through 2027, December 2026 TTF prices would likely exceed EUR100/MWh.