Gas prices in Europe have suddenly become more expensive. The market reacted quickly

Gas prices in Europe rose sharply at the beginning of the week. On Monday, benchmark gas contracts in Amsterdam jumped to €43 per MWh, an 11% jump. Previously, the prices had already increased by 6.2%. The market responded in this way to the prolonged closure of the Strait of Hormuz, which remains one of the most important routes for global oil and gas supplies.

The situation is further complicated by the fact that the strait was closed again less than a day after it was previously announced to be open. Iranian authorities warned ships not to approach the area. This only intensified market tensions and increased fears of further disruptions in raw material supplies.

Gas prices in Europe are rising due to tensions around Hormuz

According to the information provided, the US Navy detained an Iranian cargo ship that was trying to break the blockade of Iranian ports. US President Donald Trump announced that during this intervention, the American ship allegedly damaged the detained vessel. Earlier, U.S. Central Command said 23 ships turned back after warnings from the U.S. Navy before reaching the blockade line.

At the same time, Iran maintains its own restrictions on traffic through the Strait of Hormuz, which it has practically blocked since the outbreak of the war with the US and Israel on February 28. Over the weekend, there was also information about Iranian shelling of units trying to get through this route. This means that the market still takes into account the risk of further interruptions in the trade in energy raw materials.

Gas prices in Europe and low stocks in the EU

The situation is also influenced by the level of gas stocks in the European Union. Currently, warehouses are 30.2% full, while the five-year average for this period is 42.9%. This is a clear difference, which increases concerns about the possibility of rebuilding reserves before the next season of higher demand.

Analysts indicate that Europe may have a serious problem replenishing its reserves if it does not obtain larger amounts of liquefied natural gas. An additional difficulty is the growing competition with Asia. As Masanori Odaka from Rystad Energy estimated, European countries will have to compete fiercely for supplies with Asian countries, which are also trying to compensate for the losses in gas supplies from Qatar.

Gas prices in Europe under pressure from war and LNG suspension

No LNG cargo has been exported from the Middle East since U.S. and Israeli attacks on Iran began in late February. This means a disruption of one fifth of the world’s supply of this fuel. In such conditions, gas prices in Europe remain extremely sensitive to any change in the situation around the Strait of Hormuz and further developments of the conflict.