Iran-US Tensions Spark Record European Gas Prices

European natural gas prices have reached a new high of €75/MWh on Wednesday, surpassing levels seen since January 2023. This surge is largely attributed to rising tensions between the US and Iran, which has led to concerns over disrupted LNG supplies from the Persian Gulf.

Iran retaliated against US military bases in Jordan, Kuwait, and Bahrain following recent attacks by the US on Iranian targets near the Strait of Hormuz. President Trump stated that these actions were taken in response to alleged Iranian mine-laying attempts and a previous attack on a US base in Jordan.

LNG flows through the strait have been significantly reduced, causing tight supplies and prompting European buyers to aggressively compete for alternative cargoes ahead of the winter heating season. With gas storage levels still below their usual seasonal levels, an extended disruption could lead to heightened price volatility as colder weather sets in.