European natural gas prices surged to their highest level since mid-March on Monday after overnight U.S. military strikes on Iranian missile sites in the Strait of Hormuz heightened regional supply risks.
The Dutch front-month natural gas contract rose 3.15 euros, or 4.7%, to 70.10 euros per megawatt-hour, breaching the 70-euro threshold for the first time in more than five months. The gain reversed a brief mid-August pullback in European gas markets.
Trading in British wholesale gas markets remained closed on Monday for a public holiday, limiting immediate regional price discovery. The rally followed direct military clashes between U.S. and Iranian forces over the weekend, when U.S. forces conducted strikes against two Iranian rocket launchers on Larak Island in the Strait of Hormuz. Iran retaliated with missile strikes on U.S. military positions in Jordan.
The Strait of Hormuz accounts for roughly one-fifth of global liquefied natural gas flows, with Qatar the region’s dominant exporter. Any disruption to shipping lanes in the area risks tightening LNG supply to Europe, where inventories remain sensitive following last winter’s energy crisis.
Brent crude futures advanced past $90 a barrel, adding to upward pressure on European energy benchmarks. The European Central Bank is scheduled to hold its next monetary policy meeting on Sept. 10, with markets pricing in a 25-basis-point interest rate increase amid persistent inflation concerns.
