European gas prices hit near 3-year high as Middle East tensions escalate

The benchmark TTF contract gained 2.7% by 9 a.m. Amsterdam time, reaching about $100.84, or 89.76 euros, per megawatt-hour. That level equals roughly $29.50 per million British thermal units (MMBtu). The move tracked a broader rally in crude, with Brent crude touching a five-month high of $112 a barrel earlier in the session on fears that the Saudi-Houthi conflict could widen. Iran said it had hit several oil tankers transferring cargo in the Persian Gulf.

The jump in gas prices comes as European storage sits well below seasonal norms. According to Gas Infrastructure Europe, EU facilities were 74% full as of October 21, compared with a five-year average near 86% for this point in the calendar, just as the heating season begins.

Ole Hansen, head of commodity strategy at Saxo Bank, said thin storage buffers leave Europe more exposed to import disruptions through the winter months. He warned that a sustained cold snap paired with new interruptions to liquefied natural gas (LNG) shipments could push prices sharply higher from current levels.

Consultancy Timera Energy said in its winter outlook that both Europe and Asia enter the season with reduced flexibility, raising the risk of late-winter price spikes. The firm’s base case assumes the Strait of Hormuz stays closed through the fourth quarter of 2026, with only a gradual reopening in early 2027, a scenario it says would intensify upside pressure if European inventories run thin.

Why it matters for markets: Rising European gas prices and the Brent crude move to five-month highs reflect supply-risk premia tied to Middle East tensions and the Strait of Hormuz. Sustained strength in energy prices can feed into European inflation expectations, pressure industrial demand, and add volatility to oil-sensitive currencies and equity sectors.

Source: OilPrice.com