European gas hits three-year high; winter storage at 13-year low

Dutch front-month natural gas futures jumped to €73.85 per megawatt-hour in early European trading and were later around €72.20. The contract has risen roughly 25% over the past month and reached its highest level since late 2022.

Market participants pointed to renewed US strikes on Iranian targets and rising tensions around the Strait of Hormuz as factors raising concern that pipeline flows and liquefied natural gas exports from the Persian Gulf could be disrupted. About 20% of global LNG shipments normally transit the strait.

EU gas storage was 63% full in the final week of August, below the roughly 80% average for late August in recent years. Storage operators typically refill inventories over the summer; slower injections this season have left stockpiles lower than normal ahead of winter.

Analyst Greg Molnar estimated that if injections continue at the current pace, European storage could finish the refill season at about 72 billion cubic meters, roughly 19 bcm, or 20%, below the five-year average and at the lowest level since 2013. ‘Low storage levels are naturally increasing the risk of heightened winter price volatility,’ he warned.

The supply situation has already affected consumer prices. Annual inflation in the eurozone rose to 3.3% in August from 2.9% in July, driven largely by energy, where inflation accelerated to 14.3%. Core inflation, which excludes energy and food, eased to 2.4%.

Analysts tracking LNG flows say Europe currently outbids Asia for available cargoes once shipping costs are included, but competition could increase if Qatari volumes are reduced or delayed through the end of the year. Investment bank forecasts suggest benchmark European prices could move above €100 per megawatt-hour under a gradual normalization of Middle Eastern exports through 2027. Morningstar analyst Tancrede Fulop warned that a cold winter could push spot prices into the €90–120 range.

The recent strikes and the price moves were followed by declines in some Asian equity markets and by drops in bitcoin. Traders are monitoring shipping and insurance costs for LNG cargoes, winter weather forecasts and any further geopolitical developments that could affect flows through key maritime chokepoints.

European policymakers and energy companies are seeking additional supplies before the heating season, while storage and shipping developments will be watched closely in the coming weeks.