European natural gas prices rose to their highest levels since early 2023 as investors priced in the risk that escalating military confrontation involving Iran could disrupt energy transit routes and impede liquefied natural gas tankers.
Dutch TTF gas futures, the benchmark for European gas, surged past €75 per megawatt-hour. British wholesale gas contracts followed, rising to 186 pence per therm. The move came as attention focused on the Strait of Hormuz and the Persian Gulf, key maritime corridors for global LNG flows, with Qatar identified as a major LNG exporter.
The concern is that prolonged shipping bottlenecks could force European buyers into competitive bidding against Asian importers for alternative flexible LNG cargoes ahead of the winter heating season. European gas storage replenishment rates have also lagged those in previous years.
Higher energy costs have spilled into sovereign debt markets. Ten-year German Bund yields rose to multi-year highs, with the yield trading up 0.65% to 3.3791% in associated real-time market data. Investors are weighing the prospect of more persistent energy-driven inflation.
