European natural gas prices surged to their highest level since March as geopolitical tensions in the Persian Gulf disrupted supply routes critical to regional energy flows.
The Dutch front-month natural gas contract rose 4.7% on Monday to €70.10 per megawatt-hour, breaching the €70 threshold for the first time in five months. The gain follows U.S. military strikes against Iranian missile sites on Larak Island in the Strait of Hormuz, a chokepoint for liquefied natural gas shipments. Brent crude oil also climbed past $90 a barrel amid heightened supply risks.
The Strait of Hormuz carries roughly 20% of global LNG flows, primarily from Qatar, making the region’s stability a key determinant of European energy security ahead of the autumn heating season. Trading in British wholesale gas markets was suspended for the day due to a public holiday, limiting immediate market reactions.
Iran retaliated with missile strikes on U.S. military positions in Jordan, ending diplomatic efforts to secure safe passage for commercial shipping. The escalation raises the prospect of prolonged disruptions to LNG cargoes, intensifying competition between European utilities and Asian buyers for uncommitted spot cargoes.
The surge in wholesale gas and crude prices has reignited cost-push inflation concerns across European industrial sectors. Market expectations point to a 25-basis-point interest rate hike by the European Central Bank at its September 10 policy meeting, though the inflation outlook remains clouded by energy market volatility. Eurozone inflation data is due later this week, with traders monitoring the potential impact on monetary policy decisions.
