European gas prices surge past €61/MWh on Hormuz Strait supply risks

European natural gas futures extended gains on Friday, surpassing €61 per megawatt-hour, as escalating tensions in the Strait of Hormuz heightened supply disruption risks.

The rally reflects growing concerns over potential disruptions to key shipping routes in the Persian Gulf, a critical transit corridor for liquefied natural gas (LNG) shipments. The Strait of Hormuz, through which roughly a third of global LNG passes, has become a flashpoint amid regional geopolitical tensions.

Benchmark Dutch TTF gas futures rose 4.2% to €61.30/MWh, extending a three-day winning streak. Traders cited heightened risk premiums as buyers sought to secure supplies amid uncertainty over future transit security.

The surge follows recent warnings from regional officials and shipping industry groups about the potential for escalation. While no direct disruptions have been reported, the market remains sensitive to any developments that could impede LNG cargo movements.

European gas prices had already been elevated due to tight supply conditions, including reduced Russian flows and strong demand from Asia. The latest geopolitical developments have compounded these pressures, pushing prices further into record territory for the year.

Analysts at consultancy Energy Aspects noted that the risk premium embedded in gas prices could persist as long as the Hormuz impasse remains unresolved. "The market is pricing in a non-zero probability of disruption," one analyst said. "Even a temporary halt would have outsized effects given current inventory levels."

European gas storage levels remain below seasonal averages, leaving the region vulnerable to supply shocks. The latest rally underscores the sensitivity of energy markets to geopolitical risks, particularly in regions critical to global LNG trade.