Natural gas prices in Europe rose as conflicts in the Middle East revived fears of a major disruption to global energy flows.
Benchmark contracts rose as much as 25% — the most since August 2023 — after tanker traffic in the Strait of Hormuz came to a near-total halt over the weekend. Oil prices also rose sharply. Dutch futures contracts — a benchmark for the European gas market — were trading 20% higher at 38.44 euros per megawatt-hour at 8:04 a.m. in Amsterdam.
The situation represents the most serious shock to natural gas markets since Russia's invasion of Ukraine four years ago, which upended global energy flows. Although most LNG from the Middle East is headed to Asia, any disruption would intensify competition for alternative supplies, driving up prices internationally, including in Europe.
As Bloomberg reports, Europe is particularly exposed. Natural gas reserves are at critically low levels, and the region needs to import large volumes of LNG this summer to replenish them in preparation for the coming winter. If shipping through the Strait of Hormuz were to be disrupted for a month, European natural gas prices could double, according to Goldman Sachs Group.
