European Gas Advances on Rising US-Iran Hostilities

European natural gas prices rose to €88 per megawatt-hour, the highest since December 2022, as tight global LNG supply and low storage levels heightened concerns over winter supplies. EU gas storage facilities were around 74.1% full, far lower than typical levels for this time of year, with some countries struggling to meet the minimum storage requirements. Replenishing inventories has become challenging for Europe due to shipping disruptions through the Strait of Hormuz, with Middle Eastern supplies remaining about 80% lower than a year earlier. This sets the stage for fiercer competition between Asia and Europe, the world’s two largest LNG-importing regions, for available cargoes as temperatures fall. Prices remain vulnerable to further spikes in the event of a colder winter and prolonged supply disruptions. For the week, European gas prices have risen more than 7%, marking their third consecutive weekly gain.

European natural gas prices fell below €86 per megawatt-hour on Thursday, taking a pause after a rally to multi-year highs amid Persian Gulf supply risks and low winter storage reserves. Shipping disruptions through the Strait of Hormuz have constrained LNG flows from the Middle East, which accounts for around 20% of global LNG exports. The loss of Gulf supplies has intensified competition for spot cargoes, tightening availability for Europe and complicating efforts to replenish inventories. European gas storage facilities are currently around 74% full, below historical averages for this time of year. Storage replenishment could face further challenges from early-season cold weather, with updated forecasts pointing to a significant cold snap across northeastern Europe from next weekend that could boost heating demand. Meanwhile, the recovery in Norwegian pipeline supply provided some relief.

European natural gas prices fell below €86 per megawatt-hour on Wednesday but remained near their highest levels since 2022, as Middle Eastern LNG exports remained constrained and gas storage levels were still low. Although countries including the US, Canada, and Nigeria have increased LNG exports, curtailed supplies from the Persian Gulf has intensified competition for spot cargoes, limiting availability for Europe and making it harder for the region to rebuild inventories. Europe’s gas storage facilities are 73.94% full, still below historical averages. Forecasts of colder-than-usual weather, particularly in Central Europe, could drive up heating demand and prompt earlier withdrawals from storage. Meanwhile, unplanned outages at Norwegian gas infrastructure have also reduced pipeline export capacity to Europe. With low gas storage levels and uncertain Gulf supplies, Europe faces the risk of sharp price increases if a severe cold snap hits this winter.