European gas prices hit four-month high as Iran war threatens winter supply

Qatari LNG delays compound storage shortfall, analysts say

The Dutch TTF natural gas benchmark, the European reference price, briefly rose above €60 per megawatt-hour on Monday, approaching the peaks seen immediately after the U.S.-Iran conflict began in late February, before easing back to about €57. The price jump came after the U.S. expanded its aerial offensive and Iran retaliated with strikes on Bahrain and Kuwait, according to the Guardian.

Analysts at Independent Commodity Intelligence Services (ICIS) said the conflict has delayed the expected recovery of Qatari LNG exports, which were already constrained by the war. The disruption has cut into the summer months when Europe typically builds up storage ahead of winter demand.

“A cold winter start would substantially increase the cost of meeting the EU’s 80% storage target,” said Andreas Schroeder, head of energy analytics at ICIS. “While security of supply remains achievable, the cost of achieving it rises sharply.”

European gas storage is now less than 54% full, compared with 64% at the same point last year, according to the Guardian. ICIS calculated that just 26 LNG cargoes have crossed east out of the Gulf since the conflict began on Feb. 28, compared with the usual 90 to 100 each month.

The firm estimated that European countries may need to pay about €54 per MWh this autumn to restock supplies, and up to €60 per MWh if a colder start to winter materializes. ICIS cut its forecast for global LNG supply this year from 441 million tonnes to 431 million tonnes, reflecting the Qatari disruption.

The latest escalation also threatens shipping through the Strait of Hormuz, through which about 20% of the world’s oil and gas passed before the conflict broke out, according to the Guardian.

“There has also been a knock-on effect on oil markets, with Brent crude briefly breaching $90 a barrel on Sunday — its highest level in a month — before easing after Iran said diplomatic exchanges with the U.S. via mediators were continuing despite the strikes.

Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, said the price surge illustrates the limits of domestic policy. “Gas prices rising to near the peaks of the start of the U.S.-Iran war is a reminder that whatever we do in the UK, it has no significant impact on the price we pay for gas,” Ralston said. “The reality is that we are tied to international markets and the volatility that has come twice in the past few years from war thousands of miles away.”