European Gas Head for Biggest Monthly Gain Since 2021

European natural gas futures fell to €54.3 per MWh but remained on track for their largest monthly gain since September 2021. Prices have surged more than 70% this month as the Middle East war prompted the closure of the Straiht of Hormuz, through which about a fifth of global LNG flows, as well as the shutdown of the world’s largest LNG plant in Qatar. The conflict has now stretched into its fifth week with no indication of de-escalation, heightening fears of a sustained disruption to supplies. President Trump warned that the US could target Iran’s electric plants, oil wells, and Kharg Island if a deal is not reached soon and if the Strait is not reopened. However, some upward pressure on prices has been tempered by milder weather forecasts and stronger renewable output in Europe, which are curbing demand for natural gas.

European natural gas futures edged higher to around €55 per MWh as supply risks offset weaker demand, with geopolitical tensions remaining in focus. President Donald Trump said a deal to end military operations in Iran is likely but warned of major strikes on key infrastructure including Kharg Island if the Strait of Hormuz is not reopened. Energy markets had surged earlier as more US troops were deployed and Iran backed Houthi forces in Yemen entered the conflict, launching attacks on Israel and raising fears of supply disruptions. Around a fifth of global LNG typically passes through the strait, but traffic has nearly halted since late February. Despite elevated risks supporting prices, gains are more moderate due to milder weather and stronger renewable output in Europe, which are easing demand. Still, prices are up more than 70% over March as the conflict continues to strain supply routes.

European natural gas futures rose to €55.6 per MWh on Monday, a 73% surge so far in March and putting it on track for the strongest monthly gain since September 2021. The rally has been driven by fears of deeper supply disruptions as the conflict in the Middle East widens. Iran-backed Houthi militants in Yemen have joined the war, launching their first attack on Israel, while the US has deployed thousands of troops to the region, raising fears of further escalation that could disrupt more supplies. The war has all but halted LNG shipments through the Strait of Hormuz and led to the shutdown of the world’s largest LNG plant in Qatar, leaving Europe scrambling to replace supplies from the Gulf. Europe’s gas storage is critically low at around 28%, raising concerns that the bloc may struggle to refill inventories ahead of the next heating season. Experts warned that energy shortages could emerge within weeks if LNG shipments do not resume.