Europe gas rises as tanker threats counter surge in Hormuz LNG shipments

European and British wholesale natural gas prices surged on Tuesday, driven by ongoing attacks on tankers in Middle Eastern waterways. The Dutch benchmark front-month contract rose 3% to 75.74 euros per MWh, after previously falling. In the UK, the equivalent wholesale gas contract increased by 3 pence to 189.00 pence per therm.

Despite a brief early-week dip, gas prices rebounded as energy desks processed data showing a significant increase in LNG shipments through the Persian Gulf. However, tanker threats and drone/missile strikes at commercial tankers and energy infrastructure continue to heighten shipping insurance rates and create unpredictable transit routes.

UBS raised its fourth-quarter 2026 Dutch TTF price forecast to €75/MWh, up from €62/MWh, and its 2027 target to €45/MWh from €40/MWh. While UBS anticipates diplomatic negotiations to stabilize shipping activity by year-end, analysts warn that gas supply recovery will outpace crude oil following the recent military escalation. The rise in European energy costs complicates central bank trading outlooks, with ECB Chief Economist Philip Lane stating that higher energy costs have yet to trigger strong inflation pass-through.

EU gas storage levels are at 72% as of the latest data, a modest improvement from 66% in the previous month, but still below historical averages, making prices highly sensitive to early cold snaps or shipping disruptions.