European gas tops €48/MWh as Iran tensions threaten winter supply

European natural gas prices surged above €48 a megawatt-hour as escalating U.S.-Iran tensions threatened LNG supplies ahead of the heating season.

European natural gas prices climbed above €48 a megawatt-hour on Wednesday as the latest escalation between the U.S. and Iran raised concerns about fuel supplies ahead of Europe's winter heating season.

"The revocation of the oil sanction waiver is a complete destruction of the Memorandum of Understanding between the United States and Iran," said Brett Erickson, managing principal at Obsidian Risk Advisors. "The oil sanction waivers were the only notable upfront concession that Iran received for the joint lifting of blockades in the Strait of Hormuz."

The price move followed attacks on a Qatari liquefied natural gas tanker and a Saudi-flagged crude vessel near the Strait of Hormuz, through which about one-fifth of the world's oil and gas supplies transited before the conflict. The US Navy-led Joint Maritime Information Center raised the threat level for transiting the strait to "severe" from "substantial," the first time at that status since June 15. Brent crude rose more than 5 percent to near $76 a barrel in post-market activity.

The disruption comes as Europe enters its heating season, when natural gas demand typically peaks. Traffic through the Strait of Hormuz remains tentative at between one-third and one-fifth of pre-war levels, according to maritime data. If the waterway remains compromised, European utilities may face higher fuel costs that could feed through to consumer energy bills and broader inflation.

The White House revoked a license it granted Iran in June to sell oil, calling the attacks "wholly unacceptable." Washington had eased decades-old sanctions as part of an agreement to reopen the waterway after the three-month war that sent energy prices soaring earlier this year.

Qatar strongly condemned the attack on the Al Rekayyat LNG tanker, which was hit by a projectile and caught fire while traveling south out of the strait toward the Gulf of Oman. "The targeting of the Qatari tanker constitutes an unacceptable assault on the security and safety of international navigation and global energy supplies," Majed Al Ansari, spokesman for Qatar's foreign ministry, said on X. The UK Maritime Trade Operations center confirmed the projectile struck the port side of the vessel, with no reports of casualties or environmental damage.

Iranian state television said the LNG tanker came under attack after ignoring warnings, though Tehran did not directly claim the assault. Hossein Royvaran, a Tehran-based analyst, told Al Jazeera the vessel may have strayed into an area where Iranian teams were performing mine-clearing operations. Saudi Arabia's foreign ministry condemned the attacks on the Wedyan supertanker, holding Iran fully responsible for the damage.

The last time the Strait of Hormuz faced a comparable disruption was during the three-month war that ended in late June, when energy prices surged and global supply chains were severely strained. The current escalation suggests the fragile détente between Washington and Tehran may be unraveling, with the two countries having wrapped up a round of talks last week without a permanent agreement on Iran's nuclear ambitions and its control over the waterway.

For European consumers and industries, the timing is particularly challenging. Natural gas storage facilities across the continent are being drawn down ahead of winter, and any sustained disruption to LNG shipments from Qatar — one of Europe's largest suppliers — could accelerate price increases. Higher energy costs would compound inflationary pressures that central banks across the region are still working to contain.

This article is for informational purposes only and does not constitute investment advice.