European Gas Prices Surge to 1-Month High on Strait of Hormuz Supply Fears

European wholesale natural gas prices surged to their highest point in over a month on Monday, driven by acute concerns over global liquefied natural gas (LNG) supplies following reports that Iran had closed the critical Strait of Hormuz waterway.

Price Spike

The benchmark Dutch TTF front-month contract, a key indicator for European gas prices, climbed 4.1% to trade at €50.65 per megawatt-hour in afternoon trading. In the United Kingdom, the equivalent contract saw a similar jump, rising nearly 5% to 122 pence per therm as energy markets reacted to the escalating geopolitical risk.

Geopolitical Catalyst

The price increase was a direct response to Iran's declaration that the Strait of Hormuz was closed "until further notice" following renewed military exchanges with U.S. forces. The waterway is a vital chokepoint for global energy trade, responsible for the transit of approximately one-fifth of the world's total LNG, including the majority of exports from Qatar.

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While the U.S. Central Command stated that the shipping lane remained open to commercial traffic, the threat of a potential blockade injected significant volatility into the market. The development reversed a recent trend of easing prices, which had been based on hopes that a wider regional conflict could be averted.

Market Impact and Outlook

The supply fears come at a sensitive time for Europe, which is in the process of refilling its gas storage facilities ahead of the 2026/2027 winter season. Current storage levels are reportedly at 47% capacity, below the 56% recorded at the same point last year.

Analysts warn that any prolonged disruption to LNG flows from the Gulf would significantly tighten the global market. Such a scenario would intensify competition for available cargoes with buyers in Asia, putting further upward pressure on prices and complicating Europe's efforts to ensure its energy security.