European natural gas prices climbed to their highest levels since March on Tuesday as renewed military exchanges between the United States and Iran increased concerns over LNG shipments through the Persian Gulf.
The benchmark Dutch front-month gas contract rose 1.3% to €71.30 per megawatt-hour (MWh), extending a gain of almost 5% in the previous session and remaining above €70.
In Britain, wholesale gas prices recorded a larger move as traders returned following Monday’s public holiday. The NBP contract increased 6.4% to 175.40 pence per therm.
The increases came as energy markets assessed the potential impact of further disruption to commercial shipping through the Strait of Hormuz, a major transit route for global LNG supplies.
Strait of Hormuz remains in focus after U.S.-Iran strikes
U.S. forces carried out air strikes against Iranian rocket launchers on Larak Island, followed by Iranian missile attacks on two U.S. military air bases in Jordan.
U.S. President Donald Trump has raised the possibility of additional strikes against Iranian infrastructure, adding uncertainty over the duration of the conflict and its potential effect on commercial shipping.
Approximately one-fifth of global LNG supplies transit the Strait of Hormuz, with Qatar accounting for a significant proportion of those volumes.
Any extended disruption to the waterway could affect the availability of LNG cargoes for international buyers. European utilities, which have reduced access to pipeline imports compared with previous years, also compete with Asian buyers for spot LNG supplies.
European gas storage levels remain below seasonal average
The latest price increase comes as European gas storage levels remain below their recent seasonal norms ahead of the 2026/27 winter heating season.
According to Gas Infrastructure Europe data cited in the supplied information, regional storage facilities are approximately 62% full, around 17 percentage points below the five-year seasonal average.
Higher summer electricity demand during periods of elevated temperatures in Southern Europe, together with scheduled maintenance affecting Norwegian offshore pipeline supplies, reduced the pace of storage injections during August.
These conditions leave European gas markets more exposed to changes in LNG availability as the winter season approaches, although actual winter supply conditions will depend on factors including weather, demand and future import flows.
Higher energy prices add to inflation considerations
European natural gas prices have risen alongside crude oil, with Brent holding above $91 a barrel.
Higher wholesale energy prices could feed into European inflation if sustained, although the extent and timing of any effect on consumer prices remains uncertain.
Preliminary data released Tuesday showed Eurozone headline inflation accelerating to 3.3% year over year in August, with energy costs contributing to the increase.
The figures come ahead of the European Central Bank’s September 10 monetary policy meeting. Market participants have increased expectations for another 25-basis-point interest-rate increase, although the ECB has not yet made its policy decision and the outcome remains uncertain.
European gas markets therefore remain focused on developments in the Persian Gulf, LNG shipping through the Strait of Hormuz and the pace of storage accumulation ahead of the winter heating season.
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