European gas prices hit three-week high on Hormuz tensions, low storage

European natural gas prices climbed to their highest level in three weeks on Monday as escalating tensions around the Strait of Hormuz disrupted LNG shipments and intensified concerns over the continent's ability to replenish storage ahead of winter.

Dutch front-month futures at the Title Transfer Facility (TTF) rose 1.83% to €62.55 per megawatt-hour, while British wholesale gas contracts jumped more than 2% to 154.01 pence per therm, both reaching levels not seen since July 24. The rally marked a fourth consecutive session of gains across European gas benchmarks.tradingpedia

Hormuz Impasse Squeezes Supply

The price surge followed an escalation in U.S. diplomatic and military rhetoric toward Tehran, with Washington warning it could enforce a full naval blockade on Iranian ports if commercial shipping through the Strait of Hormuz remains constrained. The strait, which carries roughly one-fifth of the world's LNG supply, remains effectively shut, choking off critical volumes from Qatar-origin carriers.qatar-tribune+2

Continued Israeli military strikes on Lebanon despite a ceasefire, along with new U.S. threats of sanctions against Iran, have reduced expectations of an imminent agreement that could help reopen the waterway, according to Anadolu Agency. European buyers are also contending with Asian importers willing to pay higher prices for uncommitted LNG cargoes, further squeezing available supply.tradingpedia+1

Storage Deficit Compounds Winter Risk

EU underground gas storage stands at roughly 59–60.8% of capacity — described as a historic low for mid-August and on par with levels last seen in summer 2021 when Russia began restricting exports. Intense heatwaves across southern and central Europe have diverted gas intended for storage toward power generation for cooling, constraining the injection pace needed to meet winter targets.azernews+3

"The EU natural gas market is vulnerable looking ahead to peak winter demand," Kieran Tompkins, senior climate and commodities economist at Capital Economics, wrote in a recent note. "Storage levels are the lowest for this point in the year for over a decade."qatar-tribune

Double Blow From Heat and War

Europe's sweltering summer — its fifth heatwave this year — is compounding the energy strain. Romania declared a state of energy emergency in August after record-low Danube water levels forced its sole operational nuclear reactor offline, while France and Hungary curtailed nuclear output for similar reasons, according to CNN. Netherlands-based Triodos Bank estimates the heat could cost Europe's economy €180 billion this year, or 1% of GDP.qatar-tribune

Benchmark gas prices are now nearly double year-ago levels, with the Iran war having made LNG cargoes scarcer and more expensive. Massimo Di Odoardo, vice president of gas and LNG research at Wood Mackenzie, warned that if the Strait of Hormuz does not reopen before winter, "this could certainly result in prices being extremely high."qatar-tribune