TTF Gas Prices Surge on Middle East Supply Fears

European natural gas prices extended their rally, rising above €93/MWh on Friday to hit a fresh multi-year high as ongoing disruptions to Persian Gulf supplies kept the global LNG market tight ahead of winter. Reports of US preparations for a possible new attack on Iran after the US midterm elections raised the risk of sustained supply disruptions. LNG shipments from the Middle East remained around 80% below year-ago levels, setting the stage for more intense competition between Europe and Asia, the world’s two largest importing regions, for available cargoes. European gas storage stood at 74.62% of capacity as of October 22, the lowest seasonal level since records began in 2009, leaving the region with a limited buffer ahead of winter and increasing its vulnerability to further supply disruptions and stronger heating demand. European gas prices have climbed 4% this week, their fourth consecutive weekly gain.

European natural gas prices climbed above €89/MWh on Thursday, their highest level since late 2022, as reports of US and Israeli plans for possible new strikes on Iran fueled fears over prolonged supply disruptions. The proposed operation focuses on an intensive three-day campaign targeting Iran’s nuclear facilities, missile and drone capabilities, and parts of its energy infrastructure. This comes as continued attacks on vessels in the Strait of Hormuz have complicated prospects for a recovery in LNG shipments, with exports running around 80% below year-ago levels. Alternative suppliers have limited capacity to rapidly compensate for the loss of Gulf exports, increasing the risk of tight market conditions persisting into 2027. European gas storage stood at 74.58% capacity as of October 21, the lowest level for this time of year since records began in 2009, leaving the region with a limited supply buffer as winter approaches.

European natural gas prices rose above €88/MWh on Wednesday, moving back near a multi-year high after sliding more than 3% in the previous session as traders weighed mixed reports on efforts to end the Middle East war. Tuesday’s decline came after unconfirmed reports that Qatar and Pakistan had submitted a new proposal aimed at reviving talks to end the conflict. However, a diplomat involved in the negotiations said reports of an imminent agreement were incorrect. European gas prices remain more than double their pre-conflict levels amid ongoing disruptions to LNG supplies from the Persian Gulf and unusually low inventories. As of October 20, European storage facilities were 74.62% full, the lowest seasonal level since records began in 2009. The situation is particularly concerning in Germany, Europe’s largest economy, with storage levels just above 61%. Strong LNG demand from Asia also increases the risk of more intense competition for cargoes when colder weather arrives.