European Gas Extends Surge as Trump Reimposes Hormuz Blockade

European natural gas prices fell to €52 per MWh on Wednesday, extending losses for a third straight session and reaching the lowest level since July 16, as markets weighed prospects of a renewed Middle East deal that could reopen the Strait of Hormuz and restore gas supplies from the Persian Gulf. Qatar said mediation efforts between the US and Iran have reached an advanced stage, with a draft proposal already prepared, while American officials expressed optimism that an agreement could soon be reached. However, concerns persist in Europe amid low gas inventories, with the region’s storage levels now at their lowest for this time of year in almost two decades. With roughly one-fifth of global LNG supply still disrupted by the conflict and Asian buyers competing aggressively for available cargoes, analysts anticipate European gas prices to remain elevated, leaving the market highly sensitive to any delays or setbacks in ongoing diplomatic negotiations.

European natural gas prices have eased to €58/MWh, around 9% lower than the 3-1/2-year high of €63.7/MWh reached on July 24, but they remain nearly 70% above levels seen at the same time last year. Prices continue to be supported by concerns over global LNG supply following the conflict in the Middle East, which disrupted around one-fifth of global LNG flows and hindered Europe's summer stockpiling efforts. EU gas storage is currently only 57% full, the lowest seasonal level since 2009, well below historical averages. While the European Commission remains confident that substantial spare LNG import capacity and a storage target of 80% will be sufficient to meet winter demand, Europe is expected to face intense competition from Asia for available cargoes, keeping upward pressure on prices. Although recent diplomatic signals between the US and Iran have eased oil prices and raised hopes for improved shipping through the Strait of Hormuz, LNG supply risks remain elevated.

European natural gas prices rose above €59 per MWh on Tuesday, rebounding after Monday's selloff amid uncertainty over renewed US-Iran diplomacy following mixed signals from both sides. President Trump said on Monday that talks were underway, warning that Iran had a last chance to reach a deal and avoid large-scale air strikes. Tehran, however, denied holding talks with Washington, although it said discussions with Oman to ensure safe passage through Hormuz were progressing. Another reported attack on a commercial vessel in the waterway further highlighted ongoing security risks. The conflict has disrupted roughly one-fifth of global LNG supply, intensifying competition between European and Asian buyers for cargoes and slowing the pace of Europe's gas storage replenishment. European storage levels have fallen to their lowest for this time of year in nearly two decades, heightening concerns over the region's gas supply security as the heating season draws closer.