Hormuz Crisis Drives European Gas Prices to Record Highs

Europe's natural gas prices have skyrocketed since the war in Iran trapped a fifth of the world's liquefied natural gas supply behind the Strait of Hormuz. The high prices are causing headaches for governments, with soaring energy bills for households and spiking energy costs for industry.

The surge in natural gas, gasoline, and diesel prices is fueling inflation, leading to two interest rate hikes by the European Central Bank since June. Despite a highly uncertain outlook, the ECB's Governing Council has not committed to a specific interest rate path.

Qatari LNG cargoes are struggling to transit through the Strait of Hormuz due to ship-to-ship transfer difficulties compared to oil shipments. Even with some Qatari and UAE cargoes managing to pass through in recent weeks, volumes remain too low to impact the global LNG balance.