Key facts
- European natural gas prices rose 5% to over 70 euros ($81.20) per megawatt-hour.
- This marks the highest price for the front-month benchmark futures since January 2023.
- Oil prices also increased by 3.6% due to concerns over Middle East supply disruptions.
- The Strait of Hormuz remains a bottleneck for LNG traffic, impacting global supply.
- Qatar has extended its force majeure on LNG deliveries for an additional month.
European natural gas prices surged 5% in early morning trade on Monday, reaching their highest level since January 2023, driven by escalating tensions between the United States and Iran. The benchmark price at the Dutch Title Transfer Facility (TTF) surpassed 70 euros ($81.20) per megawatt-hour amid intensified concerns about LNG supply from the Middle East.
Oil prices also saw a significant increase of 3.6%, as the renewed hostilities raised fears of disruptions to oil volumes transiting the Strait of Hormuz. The ongoing blockage of the Strait for LNG traffic is tightening global gas markets, intensifying competition between Asia and Europe for available supply ahead of winter. Europe is particularly vulnerable, heading into the colder months with historically low gas storage levels.
Adding to the supply concerns, Qatar announced an extension of its force majeure on LNG deliveries for another month through October. While oil flows through the Strait of Hormuz are estimated to have rebounded, LNG cannot be similarly rerouted via ship-to-ship transfers, making its supply chain more susceptible to geopolitical disruptions.