Europe's Gas Prices Soar Amid Strait of Hormuz Conflict
A conflict in the Middle East has driven European gas prices above EUR60 per megawatt-hour, threatening winter supply. The Strait of Hormuz, a crucial shipping route for energy exports, remains disrupted after military strikes escalated.
Massimo Di-Odoardo, Head of Gas & LNG Research at Wood Mackenzie, noted that three structural dynamics are amplifying upward pressure on gas prices. European gas storage is just above 50% full, a historically low level for this time of year, raising concerns about securing sufficient gas ahead of the 2026/27 winter heating season.
Asian demand has rebounded since April and is now back at 2025 levels, despite a shortfall of Qatari volumes and firm prices. This intensifies competition with Europe for marginal cargoes, pushing prices higher. Limited additional LNG supply volumes are expected to come to market over the next 9 to 12 months.
Under a best-case scenario where Qatar restarts production and reaches full operational capacity by the end of September, European storage is estimated to reach only 75% capacity by 1 November. If flows resume through the Strait, prices would initially drop, but low storage inventories almost guarantee elevated prices through this winter and into 2027.