TLDR
- Natural gas prices across Europe climbed as much as 6% on Monday, reaching levels not witnessed since the 2022-2023 energy emergency
- Storage facilities in Europe are hovering near 68% capacity, significantly beneath the five-year historical average exceeding 80%
- The kingdom of Saudi Arabia halted operations on its East-West crude pipeline, limiting bypass alternatives to the Strait of Hormuz
- The chief executive of JERA cautioned that maritime disruptions near the Strait of Hormuz may persist for an extended period
- Brent crude oil climbed toward $112 per barrel, intensifying stagflationary concerns throughout the continent
Natural gas markets across Europe experienced a dramatic rally on Monday, with prices climbing up to 6% and touching their highest point since the energy emergency of 2022-2023. The surge came as Middle East geopolitical tensions intensified and experts raised alarms about perilously depleted storage reserves heading into the heating season.
Europe’s primary gas benchmark, the Dutch TTF front-month futures contract, climbed to approximately 83-84 euros per megawatt-hour. This represents a level exceeding those observed in January 2023, during Europe’s initial winter season operating with minimal Russian natural gas imports via pipeline.
Meanwhile, Britain’s NBP wholesale gas benchmark surged nearly 5%, breaching the 200 pence per therm threshold for the first occasion in several years.
Storage at a Decade Low
Underground storage facilities across the European continent currently hold just below 70% of total capacity. This stands in stark contrast to 82% at this identical time in 2025 and surpasses the five-year historical average which exceeds 80%.
Energy analysts warn that Europe is approaching the winter heating season with storage reserves among the lowest recorded in the past twenty years. The substantial deviation from historical norms has triggered anxiety throughout energy trading markets.
Yukio Kani, who serves as CEO and Chairman of JERA—Japan’s premier power generation company and among the globe’s largest liquefied natural gas purchasers—delivered a stark warning on Monday. He emphasized that European reserve levels are alarmingly low while disruptions affecting the Strait of Hormuz shipping corridor may extend beyond current expectations.
Middle East Supply Crunch
The catalyst for Monday’s dramatic price movement was the kingdom of Saudi Arabia’s decision to suspend operations on its East-West crude oil pipeline during the weekend. This critical infrastructure enables Saudi Arabia to transport petroleum products while circumventing the Strait of Hormuz chokepoint.
Escalating military tensions throughout the Persian Gulf region have already curtailed LNG carrier movements through the strategic waterway to minimal levels. Qatar, ranking among the planet’s foremost LNG exporters, relies extensively on this shipping route.
Houthi militant forces operating from Yemen have pushed closer to Red Sea shipping corridors. Recent attacks targeting regional pipeline networks have complicated access to alternative transportation pathways.
Commodity analysts at Kpler have issued warnings about an emerging worldwide “fight for fuel,” particularly should this winter prove colder than climatological forecasts suggest. Spot market LNG prices throughout Asia reached their highest point since 2022 during the previous week, demonstrating that competition for available shipments is becoming increasingly fierce.
The head of commodity strategy at Saxo Bank observed that supply disruptions have propelled European natural gas prices to levels equivalent to crude oil at $140 per barrel.
Energy Costs Add Pressure on Central Banks
Brent crude advanced approximately 3-4% during Monday’s trading session, approaching $112 per barrel. This compounds the energy price shock currently impacting European economic activity.
The European Central Bank elevated its deposit facility rate to 2.50% during last Thursday’s policy meeting. With natural gas and petroleum prices continuing their upward trajectory, money market participants now anticipate central banking authorities will maintain restrictive monetary policy settings throughout much of the coming year.
Rapidly escalating energy expenses elevate the probability of more widespread inflation throughout the eurozone currency bloc. This dynamic places monetary policymakers in an increasingly challenging predicament as the winter season approaches.
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