Iran Conflict Sends Shocks Through European Energy Markets
The conflict in Iran has sent shockwaves through European energy markets, pushing gas prices above €75 per megawatt hour and driving yields on German government bonds to a 15-year high.
The Dutch TTF contract, Europe's principal wholesale gas benchmark, reached its highest level since early 2023, with the market attaching a premium to the possibility of interrupted flows through or near the Strait of Hormuz.
Qatar and the United Arab Emirates are among the world's key liquefied natural gas exporters, and European buyers compete with Asian utilities for flexible cargoes. Delays, higher insurance costs, or diversions can have significant impacts even if physical deliveries to Europe continue.
The rise in gas prices is also being reflected in inflation expectations, with euro-area inflation at 3.3 per cent in August, up from 2.9 per cent in July.