European Gas Prices Ease as LNG Flows Continue Through Strait of Hormuz

European wholesale natural gas prices retreated on Friday as shipping data confirmed that liquefied natural gas (LNG) tankers are continuing to transit the Strait of Hormuz, allaying immediate fears of a supply cutoff despite escalating military tensions in the region.

Market Prices Retreat

The downturn provided some relief to a market that had been rattled by geopolitical risk. Key European benchmarks fell during Friday trading:

• The benchmark front-month Dutch TTF contract declined 2.3% to €48.97 per megawatt-hour (MWh).
• The equivalent front-month UK contract slipped 2.4% to 117.90 pence per therm.

The drop follows a 6% spike earlier in the week. Despite the session's decline, both benchmarks remained on course to record their second consecutive week of cumulative gains, reflecting the persistent geopolitical risk premium embedded in energy markets.

Shipping Data Calms Nerves

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Friday's price action was primarily driven by real-time satellite tracking and ship-broking data. The data showed several loaded LNG carriers from major Qatari export terminals successfully passing through the critical maritime chokepoint over the past 24 hours without operational disruption.

While Iran has reportedly increased naval patrols and communications checks in the waterway following recent military exchanges, it has not halted merchant shipping traffic. This has so far prevented the worst-case supply disruption that options markets had begun to price in.

High Inventories Provide a Buffer

Further insulating the European market is the continent's robust gas inventory. According to recent data, Eurozone gas storage sites are filled to levels comfortably above seasonal averages for July, blunting the immediate impact of short-term geopolitical volatility.

However, analysts caution that the situation remains fragile. A prolonged standoff, any direct impact on LNG infrastructure, or a decision by insurers to pull coverage for transit through the Persian Gulf could quickly reverse Friday’s declines and send prices back above the psychological €50/MWh threshold.