European Gas Prices Fall as LNG Shipments Continue Through Strait of Hormuz

European wholesale natural gas prices retreated on Friday as liquefied natural gas (LNG) tankers continued to navigate the Strait of Hormuz, easing market fears of an immediate supply disruption despite escalating military tensions in the Middle East.

Price Action

The benchmark front-month Dutch TTF contract, a key European gas price indicator, fell 2.3% to €48.97 per megawatt-hour (MWh), according to data from Investing.com. In the United Kingdom, the equivalent front-month contract declined 2.4% to 117.90 pence per therm.

The drop follows a 6% spike earlier in the week driven by geopolitical risk. Despite Friday's intraday decline, both benchmarks remained on track to record their second consecutive week of cumulative gains.

Shipping Flows Defy Tensions

The price relief came after real-time shipping data confirmed that several loaded LNG carriers from Qatari export terminals had successfully passed through the Strait of Hormuz in the last 24 hours. This development calmed traders' nerves amid a volatile standoff between U.S. forces and Iran, which has heightened naval patrols in the critical waterway.

Ad

While Iran has increased checks on vessels, it has so far stopped short of halting merchant shipping traffic. This has prevented a worst-case supply cutoff that options markets had begun to price in, providing short-term relief to European energy markets.

High Inventories Provide Buffer

Europe's energy security is also being bolstered by robust domestic gas inventories. Storage facilities across the Eurozone are currently filled to levels comfortably above the seasonal average for July, providing a crucial buffer against short-term volatility.

However, market participants remain on edge. Analysts caution that a prolonged standoff, any direct impact on LNG infrastructure, or a withdrawal of insurance coverage for vessels transiting the Persian Gulf could quickly reverse the trend and push prices back above the key €50/MWh psychological level.