Iran Tensions Push European Gas Prices to Highest Levels Since Early 2023

European gas prices have reached their highest levels since early 2023 due to escalating tensions involving Iran. The Strait of Hormuz, a critical choke point for global liquefied natural gas (LNG) flows, is at risk of disruption from hostilities in the Middle East.

Benchmark Dutch TTF gas futures surged past €75 per megawatt-hour, while British wholesale gas contracts rose to 186 per therm. Traders are pricing in a geopolitical risk premium as they fear persistent hostilities could impede LNG tankers navigating Persian Gulf maritime corridors.

The rally comes at a sensitive time for Europe, where replenishment rates of gas storage facilities have lagged compared to previous years. The sharp rise in energy costs has also affected broader sovereign debt markets, pushing 10-year German Bund yields to multi-year highs as investors weigh the prospect of sticky energy-driven inflation.