Oil and gas pipeline ©Adobe Stock Images
European and British natural gas prices rose sharply on Wednesday, reaching their highest levels since 2023 as military developments in the Persian Gulf increased concerns about liquefied natural gas supply routes.
The benchmark Dutch front-month contract climbed to €74.32 per megawatt-hour (MWh), its highest level in nearly three years. In Great Britain, the equivalent NBP wholesale gas contract rose to 183.95 pence per therm, also reaching a level last seen in 2023.
The latest increases took both benchmarks above previous highs recorded during the ongoing Middle East conflict, as market participants assessed the potential duration and scale of disruption to global LNG transportation.
Strait of Hormuz Traffic Falls Following Military Escalation
The latest price movement followed strikes targeting Islamic Revolutionary Guard Corps (IRGC) sites and retaliatory missile attacks against U.S. air bases in Jordan.
Commercial shipping through the Strait of Hormuz has fallen to a fraction of pre-war levels, according to the maritime tracking data cited in the supplied information. Washington maintains that the waterway remains open to navigation.
U.S. President Donald Trump has threatened “harder” military action, including potential strikes against Iran’s Kharg Island export facility.
The Strait of Hormuz accounts for approximately 20% of global seaborne LNG transit, with Qatar representing a significant source of those shipments. Continued disruption could affect the availability of LNG cargoes for both European and Asian buyers.
The duration of the disruption and its eventual effect on regional gas supplies remain uncertain.
European Gas Storage Stands at Around 62%
The developments in the Persian Gulf coincide with Europe’s efforts to rebuild underground gas inventories ahead of the northern hemisphere winter.
Data from Gas Infrastructure Europe cited in the supplied information showed regional storage facilities at approximately 62% of capacity, below the five-year seasonal average.
Gas-fired electricity demand increased during summer heatwaves in Southern Europe, while routine offshore pipeline maintenance in Norway and delayed LNG shipments from Qatar limited storage injections during August.
The combination has left European inventories below their typical seasonal level as the autumn period approaches.
LNG Supply Remains Key Variable for Winter Market
Market participants are monitoring whether disruption to seaborne LNG supplies continues through the autumn.
A sustained reduction in LNG availability could increase competition between European and Asian buyers for uncommitted Atlantic basin cargoes. The eventual effect on prices and physical supply would depend on factors including the duration of shipping disruption, weather conditions, alternative supply availability and regional demand.