European Gas Holds Gain Amid Supply Risks

European natural gas prices steadied around €73 per MWh on Thursday after touching their highest intraday level since January 2023 in the previous session, as investors weighed the risk of further supply disruptions amid renewed US-Iran military strikes. President Trump said the renewed campaign against Iran would not last long but warned that Tehran could face heavy attacks if the dispute over the Strait of Hormuz remains unresolved. The latest escalation marked the most intense exchange of strikes between the two sides since July, with neither willing to relinquish control of the strategic waterway. Around one-fifth of global LNG trade typically passes through the strait, primarily from Qatar. With the winter heating season approaching and European gas storage levels remaining below seasonal norms, the market remains highly sensitive to any prolonged disruption to Gulf supplies.

European natural gas prices climbed further to around €74.5 per megawatt hour on Wednesday, after touching their highest intraday level since January 2023, as traders assessed the latest US-Iran attacks. Growing uncertainty over traffic through the Strait of Hormuz heightened supply concerns and weighed on sentiment. UK gas prices also surged as high as 184 pence per therm, reaching a 43-month high. The US said it had launched overnight airstrikes on targets in Iran, prompting retaliation from Tehran in the most serious escalation between the two countries in weeks. Iran’s Islamic Revolutionary Guard Corps warned that the US strikes would further restrict traffic through the Strait of Hormuz, a key energy route through which roughly a fifth of global LNG typically passes. Gas prices rose despite expectations of weaker demand, as strong wind power generation reduces the need for gas-fired electricity generation.

European natural gas prices rose further to around €74/MWh on Wednesday, the highest level since January 2023, as rising hostilities between the US and Iran heightened fears of a prolonged disruption to LNG supplies from the Persian Gulf. Iran struck back at US military bases in Jordan, Kuwait and Bahrain following the latest US attacks on Iranian targets near the Strait of Hormuz, which President Trump said were in response to Iranian mine-laying attempts in the waterway and an earlier attack on a US base in Jordan. The escalation comes as LNG flows through the strait were almost at a standstill, tightening supplies and forcing European buyers to compete more aggressively for alternative cargoes as they prepare for the winter heating season. With European gas storage levels still below their usual seasonal levels, an extended disruption would leave the region more exposed to sharper price volatility once colder weather arrives.