European Gas Prices Climb on Hormuz Shipping Risks

European natural gas prices rose toward €80/MWh, the highest level in more than three weeks, as continued tanker attacks in the Strait of Hormuz fueled supply concerns. Iran has sharply increased attacks on commercial and energy vessels transiting the waterway, highlighting persistent shipping risks and threatening to disrupt the broader recovery in fuel deliveries. Reports that Washington has asked the Pentagon to prepare options for potential strikes on Iran before the November midterm elections also heightened fears of an escalation in the conflict. Further supporting prices, forecasts point to cooler weather across Northwestern Europe, which could boost heating demand as the region heads into winter. This weather-driven support comes amid steady additions to European storage reserves, with facilities now around 73% full. Still, storage levels remain below last year's, leaving the region vulnerable to prolonged supply disruptions and sudden demand spikes.

European natural gas prices rose above €76/MWh, their highest level in over two weeks, as ongoing security risks around the Strait of Hormuz continued to threaten LNG flows from the Persian Gulf. The waterway, which handled roughly a fifth of global oil and LNG trade before the war, has seen attacks on vessels in recent weeks, raising concerns over the security and reliability of shipping. Although outbound traffic in September reached its highest level since the war began in late February, LNG flows remain over 75% below pre-war levels. In addition, QatarEnergy recently extended force majeure on LNG deliveries to Italy’s Edison through December. Europe is racing to replenish reserves ahead of winter, with gas storage levels at around 72% of capacity, well below the five-year seasonal average of 87%. With inventories lagging seasonal norms, any prolonged disruptions or a colder-than-expected start to the heating season could further tighten the market and drive prices higher.

European natural gas prices staged a sharp afternoon recovery on Friday, reversing earlier losses to trade nearly 3% higher at around €75.80 per megawatt-hour. Prices had opened near €72/MWh before turning upward, as renewed concerns over supply security prompted traders to increase positions ahead of the weekend. Market attention remained focused on potential disruptions to energy shipments through the Strait of Hormuz and continuing uncertainty over deliveries from Qatar. QatarEnergy’s extended force majeure on certain European LNG supplies, covering shipments into late in the fourth quarter, added to concerns about the availability of imported gas. The market is also facing the challenge of replenishing inventories before winter, with European storage facilities around 71% full, significantly below the five-year seasonal average of 87%.