European gas posts strongest weekly rally on Hormuz deadlock

European natural gas benchmarks are heading for their sharpest weekly gains since late July, snapping a two-week losing streak as the diplomatic deadlock over the Strait of Hormuz shows no sign of resolution and winter supply fears intensify across the continent.

Diplomatic Gridlock Fuels Price Surge

Benchmark Dutch TTF futures climbed past €61 per megawatt hour earlier this week, extending a rally that began after weekend talks between Iran and Oman failed to produce a deal to reopen the strait. Iran's Persian Gulf Strait Authority stated that "the Strait of Hormuz remains blocked and will not be reopened until Iran's conditions are accepted," according to CNBC. Just eight vessels crossed the strait on Tuesday, down from 130 to 140 prior to the war, Al Jazeera reported.investing+3

The strait has been largely blocked by Iran since late February 2026, with periodic attacks on commercial vessels and retaliatory U.S. strikes severely disrupting traffic for over five months. EU gas stocks are currently just under 58% full — the lowest for the time of year in records going back to 2011 and 12 percentage points behind last year's level, according to Reuters, citing Gas Infrastructure Europe data.congress+1

Ripple Effects Across Global Energy and Agriculture

The prolonged closure has reshaped global energy flows and sent costs surging well beyond the gas market. Asian refiners have been forced to seek alternative crude supplies as traffic through the strait remains minimal, further tightening global energy markets.cnn

Fertilizer prices are also expected to remain above pre-war levels through 2028, according to a report from CoBank's Knowledge Exchange published August 13. The Middle East supplies over 60 million tons of fertilizers and raw materials annually, with 45 million tons shipped via the Strait of Hormuz. An estimated 31 ammonia plants in the region have been directly impacted by the war.finance.yahoo

"The ripple effect of the Middle East conflict, compounded with tight supplies, will create higher fertilizer prices and complicate sourcing well into 2027 and beyond," said Jacqui Fatka, farm supply and biofuels economist with CoBank.finance.yahoo

Winter Anxiety Mounts

The urgency to restore flows is escalating as global oil reserves diminish, according to the International Energy Agency. European gas prices were almost double pre-war levels in late July, rising from around €31 per megawatt hour to just below €60/MWh, Reuters reported. With storage filling at record-slow rates and no resolution in sight, traders are bracing for a volatile winter heating season ahead.reuters+1