European Gas Prices Soar as Iran Conflict Threatens LNG Supply

The European gas price surged to its highest level since 2023 due to escalating tensions between US and Iran, threatening LNG supply disruptions. The front-month contract rose to 79 euros per megawatt-hour (MWh), while the equivalent in Great Britain touched its highest level since late 2022 at 196 pence per therm.

The Strait of Hormuz, a critical transit choke point for global liquefied natural gas (LNG) traffic, is now directly imperiled by the conflict. The widening military operations have forced European utilities into aggressive bidding wars against Asian buyers for Atlantic basin replacement cargoes.

European energy security is under strain as inventories are significantly below historical norms, with underground storage caverns filled to roughly 64% of capacity. This has severely constrained storage replenishment throughout August and early September due to intense summer heatwaves and delayed Qatari LNG shipments.