European Gas Prices Post Biggest Weekly Gain Since July on Strait of Hormuz Tensions

European natural gas prices are heading for their largest weekly gain since late July, snapping a two-week losing streak as escalating geopolitical tensions in the Persian Gulf disrupt critical energy supply routes and reignite anxieties over winter stockpiles.

A Sharp Reversal in Prices

The rally marks a significant reversal for the market. Key benchmarks saw substantial gains after a period of decline:

• The Dutch front-month contract (TTF), the benchmark for continental Europe, is on course for an almost 9% weekly advance, trading near €59.50 per megawatt-hour.
• The British front-month contract was poised for a nearly 10% surge for the week, its strongest five-day performance since July 20, trading around 145 pence per therm.

Both contracts touched their highest intraday levels since July 24 earlier in the week before seeing some profit-taking, according to the source report.

Hormuz Impasse Disrupts LNG Flows

The core catalyst for the price spike is a diplomatic breakdown between Washington and Tehran over maritime access through the Strait of Hormuz. The impasse has effectively curtailed liquefied natural gas (LNG) deliveries from major producer Qatar to European import terminals.

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Tehran has warned the strategic waterway will remain restricted until the U.S. lifts economic sanctions, while Washington has reportedly responded with counter-demands. This has forced European utilities to source replacement cargoes on the spot market just as the region enters a critical phase for building inventories.

Low Inventories Amplify Concerns

The geopolitical disruption arrives at a precarious moment for European energy security. According to data from Gas Infrastructure Europe, the European Union’s underground gas storage facilities are only 59% full — a historic low for mid-August.

This inventory level is roughly 12 percentage points behind the same period last year and is significantly below the five-year seasonal average. The slow refill rate has been aggravated by recent summer heatwaves across the continent, which increased power grid demand and forced utilities to burn natural gas for electricity generation rather than injecting it into storage.

Market Outlook

Until physical LNG vessels can resume unimpeded passage through the Strait of Hormuz and storage injection rates accelerate, trading desks expect European gas contracts to carry a heavy geopolitical risk premium. This exposes the market to continued price volatility as the winter heating season approaches.