European Gas Prices Soar Amid Strait of Hormuz Tensions

European natural gas prices rose sharply this week due to supply concerns triggered by the ongoing US-Iran conflict and tensions in the Strait of Hormuz. The October natural gas contract gained around 10% this week, with benchmark futures contracts rising by up to 4.3% before pulling back.

The US airstrikes on Iran are entering their second day, and President Donald Trump has refused to rule out a deal to end the conflict. This has increased supply concerns in energy markets, particularly regarding LNG supply and global energy competition.

According to Tancrede Fulop, a senior analyst at Morningstar, Europe does not expect a crisis like 2022 but remains structurally vulnerable to another gas shock. Fulop expects meaningful normalization in natural gas prices to be difficult before 2028, when new global LNG supply is expected to come online.