European Gas Prices Soar as Middle East Tensions Reduce LNG Supply

European benchmark natural gas prices are poised to post their fourth consecutive weekly gain due to escalating tensions in the Middle East and reduced LNG supply. The front-month price at the Dutch Title Transfer Facility (TTF) was flat on Friday but could see a 7% jump for the week.

The renewed hostilities between the US and Iran have intensified concerns about LNG flows from the Strait of Hormuz, leading to higher gas prices in Europe. This has tightened global gas markets, where Asia and Europe are competing for a shrinking pool of supply ahead of winter.

Europe is heading into winter with one of its lowest levels of gas in storage in two decades, as the war in the Middle East crippled LNG supply from Qatar and sent prices skyrocketing.

'The potential for a global 'fight for fuel' is there, particularly in a colder winter,' warned Go Katayama, principal insight analyst for LNG at intelligence firm Kpler. Asia's spot LNG price surged to its highest level since 2022 this week.