European benchmark natural gas prices jumped as the United States and Iran remain deadlocked over reopening the Strait of Hormuz, stoking concern over LNG flows just as the continent heads into winter with storage levels well below their five-year average.
Prices jump on Hormuz stalemate
Europe's benchmark Dutch Title Transfer Facility (TTF) front-month futures rose 2.15% to $83.76 (73.62 euros) as of 7:15 a.m. Amsterdam time on Monday. The gain follows a roughly 9% drop last week.
The renewed rally tracks growing concern that LNG shipments through the Strait of Hormuz will not return to normal soon, just as Europe enters the winter months with historically low gas in storage. This weekend, U.S. President Donald Trump rejected an Iranian proposal to open peace-deal negotiations. The rebuff sent oil prices rallying 2% in Asian trade.
Qatari LNG still largely offline
European gas prices reflect tight global markets, with most of Qatar's LNG supply still offline and no visibility on when shipping through the Strait of Hormuz will normalize. Some Qatari and UAE cargoes have transited the strait in recent weeks, but the volumes are too small to move the needle on the global LNG balance.
Storage gap widens ahead of winter
As of September 27, EU gas storage sites stood just below 71% full, according to Gas Infrastructure Europe. That compares with over 80% for this time of year across the past five years. Germany, the bloc's largest economy, has an even wider gap: its storage sites are just about 57% full, fueling concern over supply security should winter turn out colder than in recent years.
Still, the European Commission struck a reassuring note following a meeting of the Gas Coordination Group, which advises the Commission on security-of-supply measures. According to the European Commission: "the Commission and EU countries reconfirmed that EU gas supply remains stable"
Source: Commodities Analysis & Opinion
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