Natural gas prices are on the rise in Europe, Strait of Hormuz tensions are effective

In the Netherlands-based TTF, which is considered the reference in natural gas pricing in Europe, the megawatt-hour price of natural gas in October futures contracts closed at 66.98 euros on Friday last week.

As of 15.44 today, prices increased by 6.12 percent compared to Friday's closing last week, reaching 71.08 euros.

Natural gas prices rose above 69 euros on Monday, reaching the highest level since January 2023.

While the tension that escalated again in the Middle East this week increased concerns about energy supply security, it caused the upward trend in the European natural gas market to continue for the fourth consecutive week.

Although claims that US President Donald Trump is considering ending the Iran war limit the rise in markets, uncertainty around the Strait of Hormuz continues.

While it was claimed that US Secretary of Defense Pete Hegseth extended the duty period of US soldiers deployed in the region against Iran, according to CNN's report based on US officials, US forces ensured that oil shipments through the Strait of Hormuz continued at levels close to pre-conflict levels.

US officials have stated that Iranian forces have demonstrated the ability to quickly rebuild their military capacity, and therefore offensive pressure on Tehran should be maintained. Authorities also stated that new attacks may occur around the Strait of Hormuz in the coming days.

While the ongoing uncertainty regarding maritime transportation in the region increases concerns about liquefied natural gas (LNG) shipments from the Gulf countries to Europe, it also negatively affects the renewal rate of stocks in Europe's natural gas warehouses.

LNG demand in Asia increases competition for Europe

Disruptions in the Strait of Hormuz also increase supply competition in the global LNG market.

South Asian buyers seeking supply from the spot market instead of LNG shipments that were planned to be made within the scope of long-term supply from Qatar but could not leave the Persian Gulf, support the demand in Asia.

It is stated that utility companies in South Korea, India, Taiwan and Bangladesh held tenders to purchase spot LNG cargoes for delivery in October and November.

This additional demand in Asia stands out among the factors that may lead to strengthening price pressure in the European natural gas market by increasing competition between European and Asian buyers for limited LNG supply.

Stocks are low before winter

The fact that Europe's natural gas stocks before the upcoming winter season are at low levels compared to previous years strengthens concerns that supply and price pressure may increase in the cold months.

According to Gas Infrastructure Europe data, the occupancy rate of natural gas tanks in the European Union countries is at 65.85 percent. Europe's natural gas stocks were at 78.5 percent on September 4 last year, 92.5 percent in 2024 and 93 percent in 2023.

According to analysts, new disruptions in LNG supply, increased competition between European and Asian buyers and low stocks increase the risk of sharper increases in natural gas prices in the future.