European gas prices soar more than 25% on Middle East conflict

• Analysts warn prolonged disruption could push prices higher
• Middle Eastern conflict raises concerns over Strait of Hormuz disruptions

LONDON, March 2 (Reuters) - Benchmark Dutch and British wholesale gas prices rose more than 25% on Monday morning, after Iran and Israel stepped up attacks in the Middle East and on the suspension of many energy shipments through the Strait of Hormuz.

Most tanker owners, oil majors and trading houses have suspended crude oil, fuel and liquefied natural gas (LNG) shipments via the Strait of Hormuz, trade sources said, after Tehran warned ships against moving through the waterway.

Europe has increased imports of LNG over the past few years as it seeks to phase out Russian gas following Russia’s invasion of Ukraine.

Around 20% of the world’s LNG transits through the Strait of Hormuz and a prolonged suspension or full closure would increase global competition for other sources of the gas, driving up prices internationally.

“Approximately 8–10% of European LNG imports are indirectly linked to Hormuz flows. In a disruption scenario, Asian buyers would aggressively bid for U.S. LNG cargoes, tightening the Atlantic basin and pushing European prices sharply higher,” said SEB commodities analyst Ole Hvalbye.

The Dutch front-month contract at the TTF hub, seen as a benchmark price for Europe TFMBMc1, was up almost 8 euros at 39.96 euros per megawatt hour (MWh) or around $13.70 /mmBtu, by 0842 GMT, ICE data showed.

The British April contract NGLNMJ6 was up 23.43 pence at 102.00 pence per therm, ICE data showed.

Analysts warned that prolonged disruption could mean prices rise further.

“Even a partial impairment of shipments through the Strait of Hormuz—not a full closure— would likely raise TTF toward 50 euros/MWh, given Europe’s supply structure,” analysts at Rabobank said.

Europe is also relying on LNG imports to help fill its gas storage sites which have been depleted over the winter and are currently around 30% full, the latest data from Gas Infrastructure Europe showed.

“European storages are already significantly lower than the same time last year and a shortfall in Middle Eastern supply would also have a direct impact on prices in Europe,” analysts at Mind Energy said.

In the European carbon market, the benchmark contract CFI2Zc1 was down 0.49 euro at 69.80 euros a metric ton.