European Natural Gas Climbs as Middle East Tensions Persist

European natural gas prices rose further above €64 per MWh on Wednesday, the highest since January 2023, as concerns over a potential winter supply crunch intensified amid a lack of progress on a deal to reopen the Strait of Hormuz. President Donald Trump said that no talks with Iran are currently taking place or scheduled and that the US naval blockade remains in full force. He added that the strait is open and operating, in contrast to Iran’s position that the key waterway will remain closed until Washington meets its conditions. Traffic through the waterway has fallen to a standstill, stranding Qatari LNG tankers and delaying deliveries to Europe. The reduced inflow, combined with summer heatwaves that have boosted demand for gas-fired power generation for cooling, is slowing the seasonal buildup of gas inventories. As a result, traders are increasingly concerned that Europe could enter the winter heating season with insufficient reserves, keeping upward pressure on gas prices.

European natural gas prices extended gains, rising above €63 per MWh on Tuesday, amid fading hopes for a Middle East peace deal that could facilitate the reopening of the Strait of Hormuz. President Trump said he was in no rush to resolve the conflict and warned of military action against Oman if it obstructed US efforts to reach an agreement with Iran. Also, talks between Iranian and Omani officials over a provisional framework to manage shipping through the strait have yet to yield any concrete results. The continued maritime blockade has delayed LNG shipments from Qatar, limiting supplies available to Europe. At the same time, intense heatwaves across parts of Europe have boosted gas-fired power demand for air conditioning. These factors are slowing the pace of inventory replenishment, leaving European storage levels under greater pressure ahead of the winter heating season.

European natural gas prices climbed above €62 per MWh on Monday, hitting a fresh three-week high amid continued disruption to LNG supplies from the Gulf as US-Iran negotiations stalled. Renewed Israeli strikes against Tehran-backed Hezbollah in Lebanon, along with the latest US threats of additional sanctions on Iran, have further clouded prospects for an imminent agreement to reopen the Strait of Hormuz. Traffic through the waterway has fallen sharply following recent attacks on vessels, highlighting persistent security risks. For Europe, concerns over gas inventories are becoming increasingly pressing, as storage levels remain below historical averages and are lagging the pace needed to comfortably meet pre-winter storage targets. Efforts to rebuild inventories have also been hampered by heatwaves across Southern and Central Europe, which have boosted demand for gas-fired power generation, diverting supplies from storage.