Middle East Tensions Fuel European Gas Price Rally
European gas prices closed out the week higher on Friday due to renewed geopolitical tensions in the Middle East and uncertainty over shipping through the Strait of Hormuz. The front-month October contract at the Dutch TTF gas hub, Europe's benchmark gas market, rose by 6.12% from last Friday's close to €71.08 per megawatt-hour as of 3:44 p.m. (12:44 GMT) on Friday.
The price increase puts European gas prices on track for a weekly gain of more than 6%. Gas prices climbed above €69 on Monday, reaching their highest level since January 2023.
Renewed tensions in the Middle East have heightened concerns over energy security and extended the rally in European gas markets to a fourth consecutive week. The continued uncertainty over shipping through the Strait of Hormuz has raised concerns over LNG supplies from Gulf producers to Europe and slowed the pace of replenishment of European gas inventories.
European gas inventories remain well below levels seen in previous years ahead of the winter heating season, raising concerns over tighter supply and prices during colder months. According to Gas Infrastructure Europe (GIE) data, EU gas storage facilities were 65.85% full as of Friday, compared to 78.5% on Sept. 4 last year.