European Gas Prices Retreat Amid Iran's Threats to Hormuz Strait

European Natural Gas Futures Trade in Narrow Range as Middle East Tensions Persist

European natural gas futures traded in a narrow range on Thursday as traders weighed the impact of Iran's comments on the Strait of Hormuz on energy shipments from the Middle East. The conflict has effectively halted traffic through the Strait and shut down production at the world's biggest LNG plant in Qatar, cutting off around 20% of global supply.

In response to the outbreak, Morgan Stanley raised its forecast for European gas prices for the rest of the year, citing the need to attract large amounts of LNG to refill depleted inventories. The bank assumes a month-long outage to LNG production in Qatar, which will remove the global fuel surplus expected for 2026.

Dutch front-month futures, Europe's gas benchmark, traded 1.6% higher at €50.78 a megawatt-hour by 5:29 p.m. in Amsterdam. Despite the volatility in the market, Asian LNG buyers are preparing to purchase more supply for the next two months as the market tightens.

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RWE AG Chief Executive Officer Markus Krebber noted that if the disruption lasts longer, the situation will become more critical, with Europe needing to focus on injecting gas into storage facilities this summer to refill inventories before next winter.