European gas prices climb as Hormuz attacks rattle LNG supply

European natural gas prices hit a three-week high after Iran's Revolutionary Guards struck two tankers in the Strait of Hormuz on Monday night, according to Reuters.reuters+1
The supply shock adds to pressure from QatarEnergy's extended force majeure on 21 LNG cargoes and EU gas storage sitting well below seasonal norms.cnbc+1
A prolonged European heatwave has driven electricity demand sharply higher, with U.S. natural gas futures also rising as competition for LNG cargoes intensifies.350+1

European natural gas prices surged on Tuesday as fresh attacks on commercial shipping in the Strait of Hormuz reignited fears over LNG supply disruptions, while a prolonged heatwave across the continent continued to drive electricity demand higher.

Strait of Hormuz Escalation

The Dutch TTF benchmark, Europe's primary natural gas price reference, climbed above €48 per megawatt-hour on Tuesday, according to The Wall Street Journal ICE Futures Europe , marking its highest level in weeks. The rally followed reports that Iran's Islamic Revolutionary Guard Corps fired at least two missiles at commercial ships transiting the Strait of Hormuz on Monday night, according to Reuters, citing Axios. Two vessels suffered damage but no casualties were reported.reuters+2

A tanker caught fire off Oman's coast after being struck by a projectile, with a second Saudi-flagged crude oil tanker also damaged, according to Reuters and Al Jazeera. The UK Maritime Trade Operations raised the threat level for the strait to "severe", rattling energy markets already on edge from months of disruption to one of the world's most important shipping chokepoints.aljazeera+1

QatarEnergy Force Majeure Compounds Supply Pressure

The attacks compounded an already tight supply picture. QatarEnergy has extended a force majeure on LNG deliveries, with a total of 21 cargoes now affected over the delivery period from April to early September 2026, representing approximately 2.7 billion cubic meters of natural gas, according to CNBC and LNG Industry. The disruptions stem from Iranian drone strikes on the Ras Laffan Industrial City in March that caused extensive damage to Qatari export infrastructure.lngindustry+1

European gas storage remains well below seasonal norms. EU storage stood at roughly 48% of capacity as of early July, compared with a five-year average that typically sits above 60% at this point in the season. Analysts at Energy Aspects warned that TTF prices need to remain elevated to attract flexible LNG cargoes away from Asian buyers.energyaspects+2

Heatwave and US Market Spillover

The supply crunch coincides with sustained heat across Europe that has pushed electricity demand sharply higher. A late-June heatwave drove French electricity demand up to 12 gigawatts above seasonal norms, and wholesale power prices in several European markets reached their highest levels since 2022. Cooling demand added an estimated €700 million to electricity bills in France and Germany during a single week in late June, according to climate advocacy group 350.org.350+2

US natural gas futures also rose, climbing above $3.28 on Tuesday, as analysts warned that European utilities seeking replacement cargoes would bid aggressively for American LNG exports, potentially drawing down domestic storage. US feed gas volumes supporting LNG exports are near all-time highs.industrialinfo+1

Sources (30)