Gas prices rise amid new Hormuz Strait tensions

European natural gas prices have surged by about 25% in July, driven by renewed instability and attacks on oil tankers in the critical Strait of Hormuz. The escalating tensions have prompted Qatar to halt the flow of liquefied natural gas (LNG) through the vital waterway, according to Rystad Energy.

Analysts now anticipate that export levels will not approach normal until October, a delay from earlier expectations of September. This situation is compounded by significantly lower gas storage levels in Europe, which stand at 52% capacity compared to 62% at the same time last year, Rystad data shows.

The disruption stems from recent attacks on vessels in the Strait of Hormuz, including the LNG ship Al Rekayyat and two large oil tankers. "The market was previously concerned with when Qatar would be able to restart production. Now the question is more about when Qatar and the Emirates will be able to get their ships out," Shehar Aziz, an analyst at London Stock Exchange Group, told E24.

Adding to the upward pressure on prices is a heatwave in Europe, increasing demand, and a concurrent rise in demand from Asia. Aziz noted that for sufficient gas to reach Europe, prices will likely need to continue rising, given the current low inventory levels.

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The market was previously concerned with when Qatar would be able to restart production. Now the question is more about when Qatar and the Emirates will be able to get their ships out.