European Gas Prices Near Iran War Highs as Winter Supply Fears Return

London, 23 July 2026 — EBM Newsdesk Analysis-Anthony Gill

European natural gas prices have surged back towards the highs reached during the opening phase of the Iran war as traders confront a more troubling question than whether the continent has enough fuel today: whether it can secure enough for winter.

The Dutch TTF benchmark, the principal reference point for European wholesale gas, climbed above €62 per megawatt-hour on Wednesday. That takes its rise over the past month to almost 50% and leaves prices close to the levels recorded when the conflict first disrupted liquefied natural gas shipments through the Strait of Hormuz.

British wholesale prices followed the same direction, rising to approximately 151.3 pence per therm. The speed of the increase has been sharper than the latest rise in oil, reflecting the greater difficulty of replacing disrupted gas supplies at short notice.

The rally does not mean Europe is about to run out of gas. Infrastructure has expanded since the energy crisis of 2022, demand has fallen and the continent now has far more capacity to receive liquefied natural gas.

But the margin for error is narrowing.

The winter problem is arriving in summer

European gas storage facilities are approximately 54% full, well below their five-year seasonal average and at their second-lowest level in 15 years.

That would not normally be an alarming figure in July. Storage is refilled throughout the summer before being drawn down when heating demand rises.

The difficulty is that the fuel Europe needs to complete that refill is becoming more expensive and harder to attract.

Equinor chief executive Anders Opedal warned this week that Europe is unlikely to reach its 80% storage goal before winter because of tight global supplies and competition from Asian buyers. Germany, which holds the continent’s largest storage capacity, was reportedly only around 45% full against a national objective of approximately 70% before November.

The European Commission maintains that there is no immediate threat to security of supply and that an 80% storage level would be sufficient for the coming winter. Europe’s gas system remains capable of responding under normal conditions, supported by additional import terminals and stronger connections between national markets.

The concern is what happens if conditions are not normal.

A colder-than-average winter, another interruption to Norwegian production or a prolonged loss of Gulf LNG could rapidly turn an expensive refill programme into a genuine supply squeeze.

Hormuz matters even when Europe buys elsewhere

The Strait of Hormuz handled almost 20% of global LNG supply before the conflict. Much of that gas was destined for Asian markets rather than Europe, particularly shipments from Qatar.

That does not insulate European buyers.

LNG is a global market in which flexible cargoes are directed towards the region offering the highest price. When Gulf supplies disappear, Asian utilities compete more aggressively for cargoes from the United States, Africa and other producers—the same shipments Europe needs to refill storage.

The International Energy Agency said European and Asian gas prices reached their highest monthly averages since early 2023 after the effective closure of Hormuz. Between March and June, Asian LNG prices carried an average premium of $2.10 per million British thermal units over Europe, encouraging flexible cargoes to sail east rather than enter European terminals.

The problem has been reinforced by extreme heat on both continents. Higher temperatures have increased electricity consumption for air conditioning, while reduced French nuclear generation has forced parts of Europe to rely more heavily on gas-fired power.

France is reportedly heading towards a record-low month for LNG arrivals, demonstrating how quickly cargoes can be diverted when Asian prices become more attractive.

Europe has the terminals. It still has to secure the ships.

Britain is exposed through price rather than volume

Britain is not part of the European Union’s storage system, but its gas market is closely connected to the continent through pipelines, trading and shared competition for LNG.

The UK also has relatively limited seasonal storage capacity. It depends on a combination of North Sea production, Norwegian pipelines and seaborne LNG, allowing it to obtain substantial supplies but leaving wholesale prices highly responsive to disruptions elsewhere.

For households in England, Scotland and Wales, part of the damage has already arrived.

Ofgem raised its energy price cap by 13% from July, explicitly attributing the increase primarily to higher wholesale gas costs caused by the Middle East conflict. Average gas unit rates for households paying by direct debit rose from 5.74 pence to 7.33 pence per kilowatt-hour—an increase of around 24%.

Consumers on standard variable tariffs are protected from further wholesale movements until the current cap period ends on 30 September. But that protection delays the effect rather than eliminating it.

Ofgem will announce the cap covering October to December by 26 August. Wholesale purchasing during the relevant observation period will help determine how much of the latest gas rally reaches households just as heating demand returns.

Businesses face the exposure more directly. Most commercial energy contracts are not protected by the household price cap, leaving manufacturers, hospitality companies, retailers and energy-intensive industries vulnerable when contracts are renewed.

Europe has reduced demand—but not dependence

Europe is better prepared than it was before Russia’s invasion of Ukraine.

Gas consumption has fallen substantially, renewable electricity generation has expanded and LNG import capacity has increased. ACER estimates that Europe could still reach an 80% storage level using roughly the same monthly LNG import volumes as last year.

Doing so, however, could add between €10 billion and €15 billion to the cost of filling storage. Reaching the former 90% objective would require LNG imports to rise by approximately 13% compared with 2025.

This is the distinction policymakers are increasingly forced to make: physical availability is not the same as affordable supply.

Europe may be able to purchase enough gas to avoid shortages. The price required to attract those cargoes could still weaken industry, raise household bills and complicate central-bank efforts to contain inflation.

The verdict

The latest rally is not yet a repeat of the 2022 energy crisis. European infrastructure is stronger, gas demand is lower and policymakers have had four years to prepare for supply disruption.

But the market is warning that Europe’s winter insurance policy is becoming expensive.

Gas above €60 per megawatt-hour in July is not principally a reflection of current consumption. It is the price traders are assigning to the possibility that storage remains inadequate when temperatures fall and competition for LNG intensifies.

Europe does not need Hormuz to close completely for prices to rise further. It needs only continued uncertainty, delayed Qatari exports and an Asia willing to pay more for the same limited pool of cargoes.

The continent has spent the summer trying to fill its storage sites.

It may now have to outbid the world to finish the job.