A tanker fire in the Strait of Hormuz has sent European natural gas prices sharply higher, raising fresh fears about global LNG supply security.
The Dutch front-month gas contract, Europe’s benchmark, climbed 3.45% on Monday morning. The equivalent UK wholesale gas contract rose 3.52%. Both contracts reached their highest levels since March 23.
The price jump came after reports that a commercial tanker caught fire in the Strait of Hormuz following a strike. The strait is one of the most important shipping routes in the world for energy exports.
About one-fifth of all global LNG shipments move through the Strait of Hormuz. Most of these cargoes come from major Gulf producers. Any threat to the route puts European energy markets on high alert.
Europe has become heavily reliant on seaborne LNG in recent years. This came after Russian pipeline gas supplies dropped sharply following the conflict in Ukraine. The continent now depends on imported LNG to heat homes and keep industry running.
Crude oil prices also moved higher on the day, rising 2.2%. That pulled oil-indexed gas contracts up alongside them, adding to the broader price pressure.
Traders said LNG cargoes are still physically moving through the strait, but under tighter security conditions. The threat profile has changed, even if shipments have not yet stopped.
War-risk insurance premiums have risen sharply. Underwriters are pricing in the higher risk of active security incidents in the region. Those added costs feed directly into European wholesale gas prices.
The timing is difficult for European utilities. They are heading into a period when any supply disruption could have an outsized impact on pricing across the continent.
Markets are now closely watching whether the situation in the Strait of Hormuz escalates further. Any sustained disruption to LNG flows through the strait could push prices even higher.
The Dutch front-month contract is the main reference price for European gas trading. Monday’s move marked a multi-month high and reflected how quickly geopolitical events can shift energy market sentiment.
For now, LNG supply continues to flow, but the market has already begun pricing in the risk. Traders and utilities will be watching the situation closely in the days ahead.
Monday’s price action was a reminder of how exposed European energy markets remain to events in the Middle East, particularly along key shipping routes like the Strait of Hormuz.
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