Hormuz Clashes Send European Gas Prices Soaring

European natural gas prices have surged to nearly €70 per megawatt-hour as military clashes between the US and Iran disrupt global liquefied natural gas supplies. The escalation comes at a critical time, with European countries preparing for the upcoming winter heating season.

The price jump followed US military strikes on Sunday against Iranian rocket launchers on Larak Island in the Strait of Hormuz. Tim Hawkins, spokesperson for US Central Command, stated that Iranian forces were observed preparing to launch missiles equipped with sea mines from Larak Island towards the strait.

Iran launched retaliatory ballistic missile strikes targeting US military bases in Jordan and an airbase hosting US forces in the United Arab Emirates. The hostilities have halted LNG shipments through the Strait of Hormuz, disrupting a transit chokepoint responsible for approximately one-fifth of global LNG trade.

Natural gas reserves across the European Union stand at 64.7% capacity, significantly lower than the five-year average of 81.8%. US export terminals have ramped up activity to offset global shortages, with feedgas deliveries to US LNG facilities climbing to 18.5 billion cubic feet per day in late August.