Gulf Tensions Send European Gas Prices Soaring Near Multi-Year Peaks
European wholesale natural gas prices held near multi-year highs on Thursday, with the benchmark price rising 0.5% to trade at 79.64 euros per megawatt-hour (MWh). This comes as tensions in the Persian Gulf escalate, threatening global energy supply security.
The conflict has forced European utilities to compete aggressively for uncommitted Atlantic basin liquefied natural gas (LNG) cargoes, particularly from Qatar. The Strait of Hormuz, a critical bottleneck that handles 20% of global LNG traffic, is at risk due to the naval tensions.
European underground storage facilities are depleted, filled to only 62% of capacity, trailing the five-year seasonal average by roughly 17 percentage points. This comes as the continent enters the home stretch of the summer storage injection season.
The European Central Bank (ECB) is set to announce its monetary policy decision later in the day, with markets expecting a 25-basis-point interest rate increase to 2.50% to combat energy-driven price pressures.