European gas reaches €74.5 per MWh and Brent crosses $95 after US-Iran strikes

Escalation in the Gulf

Military strikes between the United States and Iran escalated overnight into Wednesday, disrupting key maritime supply corridors across the Middle East. US forces launched attacks targeting Iranian radar installations, air defense positions, and maritime infrastructure, with Iranian state media reporting 11 fatalities, including four wedding attendees in the southeastern region. The Islamic Revolutionary Guard Corps retaliated by firing on US military bases situated in Jordan, Iraq, and Bahrain. Earlier on Tuesday, two commercial oil tankers were struck by unidentified projectiles while exiting the Strait of Hormuz, according to the Greek maritime agency Marisks. Donald Trump defended the American operation and issued a direct warning regarding further action.

If Tehran retaliates against this perfectly justified attack, it will be struck again, much harder and stronger.

European gas prices and supply constraints

Wholesale natural gas contracts in Europe rose sharply following the overnight strikes. On Tuesday, the Dutch Title Transfer Facility benchmark climbed 6.20% to settle at €74.14 per megawatt-hour, reaching its highest level since January 2023, before rising an additional 3% on Wednesday morning to approach €74.50. The European gas benchmark has gained 35% since early August and is trading at double its value from the same period last year, according to Greg Molnar, gas analyst at the International Energy Agency. Global liquefied natural gas supply has fallen by more than 6% year on year as transit through the Strait of Hormuz remains restricted. In response to regional hazards, state producer Qatar Energy informed European and Asian buyers that it would extend force majeure declarations by several weeks. Omnegy reported that Middle Eastern gas shipments to European terminals have reached their lowest volume since 2019.

Storage deficits and winter preparation

The supply curtailment coincides with below-average storage replenishment across the continent ahead of the winter heating season. European physical gas storage facilities are filled to slightly above 65% capacity, trailing both 2025 levels and the five-year seasonal average. In Germany, inventories stand at 53%, prompting the German gas transport association FNB Gas to state that meeting the statutory target of 70% capacity by 1 November 2026 is virtually impossible. Compounding the deficit, summer heat and drought restricted hydroelectric and nuclear power generation, causing European gas consumption for electricity to rise 15% above previous seasonal averages in July and August. Technical maintenance will also keep output reduced at a primary Norwegian production field until February 2027.

Oil market reaction and domestic policy

Crude oil prices advanced in tandem with gas contracts as market participants priced in prolonged shipping interruptions. Brent crude rose to $94.65 per barrel on Tuesday before climbing to $95.49 on Wednesday morning, crossing the $95 threshold for the first time since 27 July. West Texas Intermediate gained 5.20% to $90.22 on Tuesday, climbing further to $90.72 on Wednesday. Commerzbank analyst Carsten Fritsch evaluated the setback for Gulf transit expectations.

Hopes that emerged last week for an upcoming reopening of the Strait of Hormuz to shipping have suffered a blow.

Higher wholesale oil prices pushed French retail fuel costs above €2 per liter on Tuesday. French Energy Minister Maud Bregeon confirmed that the government would consider maintaining direct financial assistance for long-distance commuters, an aid package currently claimed by 1.4 million of the 3 million eligible motorists. European utilities also face long-term procurement adjustments, with Global Risk Management analyst Arne Lohmann Rasmussen noting that European buyers must prepare for the phaseout of Russian liquefied natural gas starting 1 January 2027.