European Gas Prices Surge Amid Strait Disruptions and Maintenance Delays

European natural gas prices have reached their highest level since late 2022, hovering above €82/MWh on Tuesday. The current price is a concern due to ongoing disruptions around the Strait of Hormuz, which has been closed to most commercial traffic amid military conflict and security threats. Diplomatic efforts to reopen the strait have stalled, raising fears that shipments could be disrupted for an extended period.

The closure of the Strait of Hormuz has led to a sharp decline in LNG tanker traffic through the area, tightening global supplies and increasing competition with Asia and other buyers for available cargoes. This is further complicated by ongoing maintenance at Norwegian gas facilities, which adds uncertainty to Europe's winter supply balance.

Europe's gas storage levels stand at around 68% of capacity, nearly 17 percentage points below the seasonal norm. Typically, inventories would be close to maximum capacity by this time of year.