European natural gas prices, specifically the benchmark Dutch TTF for October 2026 delivery, soared above €70 per megawatt-hour on Monday, hitting an intraday high of €70.85/MWh. This marks the highest price point since January 2023 and is primarily attributed to intensified conflict between the US and Iran. The renewed fighting has sparked significant concerns regarding potential delays and disruptions to liquefied natural gas (LNG) exports from the Persian Gulf, a crucial region for global energy supplies.
The escalation in tensions follows weekend military operations in the Persian Gulf, including US strikes on Iranian rocket launchers near the Strait of Hormuz and Iran's retaliatory missile attacks on US forces in Jordan. This conflict threatens a prolonged closure of the Strait of Hormuz, a vital maritime passage through which approximately one-fifth of global LNG trade, predominantly from Qatar, normally passes. This disruption comes at a critical time as Europe is in the process of refilling its gas storage facilities ahead of the winter heating season.
Currently, EU gas storage facilities are 64.7% full, which is below historical levels for this time of year. High market prices have already slowed the refilling process in several countries, raising doubts about whether the Netherlands and Germany will meet their respective gas-storage targets of 80% and 70% by the November 1 deadline. Although the EU imports a relatively small amount of gas directly from the Middle East (Qatar supplied 3.7% of the bloc’s overall gas imports in 2025), analysts warn that any disruption in the Gulf can still significantly impact European prices.
A prolonged disruption to Gulf LNG exports could force European buyers into a more aggressive bidding war with Asian buyers for available cargoes, potentially pushing wholesale prices closer to €100/MWh, according to Goldman Sachs. Analysts Samantha Dart and Laura Cyr from Goldman Sachs estimate that if Middle East energy exports normalize only gradually through 2027, the December 2026 TTF price could likely exceed €100/MWh. While a short-lived price spike might have minimal impact on household bills, a sustained increase could gradually translate into higher energy costs for consumers across Europe, with the full impact taking up to six months on average to be reflected in consumer prices, varying by country.
In the UK, the energy regulator Ofgem announced a 4 percent increase in the energy price cap starting October 1, 2026, due to the sharp rise in wholesale gas prices linked to the US-Iran war. While 35 percent of UK households on fixed-rate plans will not be immediately affected, most others will face higher bills in the winter, with an average household paying about £60 ($80) more per year. The UK government introduced a tax cut on monthly electricity bills to mitigate these impacts, but experts remain skeptical about long-term cost control given the ongoing conflict.
