European Gas Prices Firm Near Multi-Year Highs Amid Gulf Tensions
European natural gas prices continued to hold near multi-year highs on Thursday, following sharp gains from the previous session due to escalating tensions in the Persian Gulf. The benchmark European price rose 0.5% to trade at 79.64 euros per megawatt-hour (MWh), lingering close to its highest level since 2023.
The conflict between the US and Iran has raised concerns about global energy supply security, particularly ahead of winter. The military friction threatens maritime transit through the Strait of Hormuz, a critical bottleneck that handles around 20% of global liquefied natural gas (LNG) traffic.
As crude oil prices remain firm above $100 a barrel, European utilities are competing aggressively for uncommitted Atlantic basin LNG cargoes. This comes at a vulnerable juncture for European energy infrastructure, with storage facilities filled to approximately 62% of capacity, trailing the five-year seasonal average by roughly 17 percentage points.
The European Central Bank's (ECB) monetary policy announcement later on Thursday will also be closely watched, as money markets have almost fully priced in a 25-basis-point interest rate increase from President Christine Lagarde and the Governing Council.