European gas prices climbed to their highest levels in four months following a renewed escalation of tensions in the Middle East, with the Dutch natural gas benchmark briefly exceeding €60 per megawatt hour. The surge followed reports that the US expanded military operations in the region while Iran conducted retaliatory strikes on facilities in Bahrain and Kuwait.
Analysts attributed the price increases to concerns about potential winter supply shortages driven by disruptions to liquefied natural gas exports from Qatar. According to market intelligence firm ICIS, only 26 LNG cargoes have departed the Gulf region since the conflict began on 28 February, compared with the typical monthly volume of 90 to 100 cargoes. This reduction has prompted a downward revision to global LNG supply forecasts for the year, with ICIS reducing its projection from 441 million tonnes to 431 million tonnes.
European gas storage levels currently stand at less than 54 percent capacity, down from 64 percent at the same point last year. Energy analysts warned that achieving the European Union’s 80 percent storage target could require substantial expenditures if elevated prices persist. ICIS modelling suggested that restocking supplies could cost approximately €54 per megawatt hour in autumn months, potentially rising to €60 per megawatt hour if winter arrives with colder than normal temperatures. Officials noted that while supply security remains achievable, costs could necessitate government intervention.
The conflict has also sent ripples through oil markets, with Brent crude briefly surpassing $90 per barrel before declining as diplomatic communications between the US and Iran continued through intermediaries. The disruption affects global energy markets significantly, as approximately 20 percent of the world’s oil and gas transits through the Strait of Hormuz, a waterway threatened by the regional tensions. Later Monday trading saw gas prices moderate to approximately €57 per megawatt hour.
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