European natural gas prices surged nearly 5% on Monday, reaching fresh highs not seen since late 2022, as elevated storage deficits and ongoing geopolitical disruptions around critical shipping lanes weighed on supply outlooks.
The UK National Balancing Point front-month contract climbed almost 5% to 201.50 pence per therm, breaching the 200.00 barrier for the first time in over three years. On the continent, the Dutch TTF front-month benchmark rose roughly 5% to €83.40 per megawatt-hour.
Underground gas storage across Europe stands at just 68% capacity, according to data from Gas Infrastructure Europe, lagging historical seasonal averages by nearly 17 percentage points. The shortfall underscores Europe's continued vulnerability heading into the winter heating season.
Yukio Kani, global CEO and chair of JERA—Japan’s largest power generator and one of the world’s biggest buyers of liquefied natural gas—warned on Monday that Europe’s gas reserves remain depleted and cautioned that shipping disruptions around the Strait of Hormuz could be prolonged.
Tensions in the Persian Gulf and Red Sea regions have reduced tanker traffic through vital transit corridors. Qatar, which accounts for a significant share of globally available flexible LNG supply, exports flow through waters near the Strait of Hormuz. Yemen’s Houthi militants have advanced closer to Red Sea shipping lanes, adding further uncertainty to LNG transit routes.
Brent crude also extended gains, jumping another 3% to near $112 a barrel, reflecting broad energy market tightness.
The price spike comes against a backdrop of recent monetary policy moves. The European Central Bank raised its deposit facility rate by 25 basis points to 2.50% last Thursday, signaling continued efforts to combat persistent inflationary pressures, of which energy costs remain a component.
