EU Gas Prices Climb as Middle East Tensions Persist

European natural gas prices rose to above €60 per MWh on Tuesday, hitting a fresh four-month high as the US and Iran continued to exchange strikes while President Donald Trump downplayed the likelihood of imminent talks. Trump said Iran “desperately wants to meet” but added that the US had no interest in talks. Iran, however, rejected these claims. Trump also warned of retaliation if Iran-backed Houthi rebels disrupted shipping in the Red Sea and renewed threats to strike Pickaxe Mountain, a suspected Iranian nuclear facility. The escalating conflict has disrupted tanker traffic through the Strait of Hormuz and curtailed LNG exports from the Gulf, fueling concerns over tighter global gas supplies. Europe is currently in the process of refilling storage facilities ahead of the heating season, and reduced LNG availability from the Gulf could force the bloc into more intense and costly competition with Asian buyers for available cargoes.

European natural gas prices climbed to above €59 per MWh on Tuesday, a four-month high, as continued attacks between the US and Iran outweighed reports of diplomatic efforts to ease tensions. Tehran said it had received a proposal from mediators for a 10-day ceasefire aimed at reviving the interim deal reached last month. This comes as the US carried out a tenth consecutive day of strikes against Iran, while Tehran continued retaliatory attacks against neighboring countries. The renewed hostilities have brought tanker traffic through the Strait of Hormuz to a standstill and delayed the anticipated recovery in Qatari LNG exports, reducing available supplies and intensifying competition among European and Asian buyers for cargoes. This makes increasingly difficult for Europe to replenish reserves ahead of winter, with storage facilities currently around 53% full, compared with roughly 64% a year ago and about 15 percentage points below the five-year average.

European natural gas prices surged as high as €60.5 per MWh during Asian trading on Monday, marking a four-month high, before trimming gains to around €58.5, amid mounting fears of deeper supply disruptions as hostilities between the US and Iran escalated over the weekend. The US Central Command said on Sunday that it had carried out a fresh round of strikes against Iran for the ninth consecutive night, while Kuwait and Bahrain reported Iranian attacks. The conflict has widened beyond military targets to include bridges, utility infrastructure, and port facilities, increasing the risk of a return to full-scale war. Shipping activity through the Strait of Hormuz has largely come to a halt, with the US enforcing a naval blockade on Iranian ports and Tehran targeting vessels it says are violating its regulations. These supply risks, coupled with stronger demand for power generation, are making it more difficult for Europe to refill its vast storage facilities before winter.