European Gas Prices Surge to Three-Year Highs on Hormuz LNG Disruption

Prices reach levels last seen in 2023

European and UK natural gas prices rallied sharply in early September, reaching levels last seen in 2023. Benchmark Dutch TTF futures for October delivery rose to €75.325 per megawatt hour at their peak, the highest since January 2023, before settling near €73–74. UK gas futures reached 184.11 pence per therm, also a three-year high. At the end of June, TTF was trading below €40—meaning prices more than doubled over the summer.

The surge coincided with a sharp deterioration in security conditions around the Strait of Hormuz. The waterway carries roughly 20% of global seaborne LNG traffic, much of it from Qatar. Direct strikes on IRGC locations and subsequent missile attacks on U.S. air bases in the region severely constrained commercial movements through the corridor, forcing European buyers into sharper competition with Asian utilities for flexible Atlantic basin cargoes.

Storage shortfall amplifies the risk

According to Gas Infrastructure Europe data cited in market reports, EU storage facilities were filled to around 62–65% of capacity in early September, lagging the five-year seasonal norm near 82%. Since the beginning of April, roughly 40 billion cubic metres of gas have entered European storage—about 59% of the volume analysts estimate is needed for the coming winter. At the current injection pace, storage could reach only 70–75% of capacity by the start of the heating season, well below the EU's 90% target.

Several factors constrained injection rates throughout August: intense heatwaves in Southern Europe lifted gas-fired power generation, planned offshore pipeline maintenance in Norway reduced pipeline flows, and delays to LNG shipments from Qatar limited arrivals. Energy companies have been reluctant to buy expensive gas at current prices and inject it into storage, preferring to wait for a potential de-escalation in the Middle East.

Inflation and policy implications

The Wikipedia article on the 2026 Strait of Hormuz crisis notes that the closure became the largest disruption to world energy supply since the 1970s, affecting not only oil but also LNG, aluminium, fertilizer, and helium markets. For Europe, which relies on a mix of pipeline gas and LNG imports, rising TTF prices directly feed into household energy bills and industrial input costs.

The European Central Bank faces an additional inflationary input just as it assesses whether prior rate cuts have been sufficient. EU gas demand has fallen by roughly 20% since 2021 due to efficiency gains and fuel switching, but the price level—not just the volume consumed—determines the inflation impact. A sustained TTF price around or above €70 per MWh reinforces already-high gas-fired marginal generation costs across southeastern and central European power markets.

Winter outlook and the feedback loop

ING analysts warn that European gas prices have recently exceeded €70 per MWh and that lower Persian Gulf LNG supply has tightened the global market, while strong Asian spot buying pushed EU LNG imports down roughly 16% year-on-year between April and July. Low storage limits the downside for European gas prices under any Hormuz scenario, because the continent enters the final phase of its injection season without the inventory cushion seen in some previous years.

The unpleasant feedback loop is straightforward: Europe needs to buy large volumes of gas before winter, yet prices are rising because of geopolitical uncertainty, which makes LNG supplies harder to secure and further discourages storage injection. If storage levels remain too low, countries may need to buy more gas on the spot market during winter, putting additional pressure on prices precisely when demand peaks. EU officials have said there is still enough time to fill storage in line with regulatory rules, but the cost of doing so is rising with every week the Hormuz crisis continues.