European Gas Prices Surge Amid Iran War Disruption

The Iran war has triggered a surge in European natural gas prices, which are now more than double their level from last year. Benchmark European gas prices hit €75 per megawatt hour (MWh) last week, exceeding levels not seen since late 2022 when Russia invaded Ukraine.

The disruption to global liquefied natural gas (LNG) supplies due to the closure of the Strait of Hormuz has led to a severe supply crunch in Europe. A significant portion of LNG that would have been shipped to Europe was diverted to Asia, where it was needed for power and cooling during the scorching summer.

This shortage has left European gas storage sites at historically low levels, with inventories currently around 66 per cent full. Germany's storage network is only 54 per cent full, while storage facilities in the Netherlands stand at just 48 per cent of capacity.