European Gas Jumps 4% to €98.60 as Hormuz Fears Resurface
Key Facts
The front-month Dutch European gas contract rose 4% to €98.60 per megawatt-hour in a report published on the morning of November 3, recouping most of its losses from the previous session. The rebound followed U.S. strikes on Qeshm Island and renewed concerns about supply disruptions through the Strait of Hormuz, according to Investing.com. The security developments renewed attention on the risk of disrupted liquefied natural gas shipments from the Middle East to global markets. A senior Iranian official told Reuters that Tehran and Washington remained far from an agreement to end the war. Qatar's foreign ministry, meanwhile, said the United States and Iran remained committed to mediation efforts and were reviewing proposals to bridge their differences.
The concerns reflect the Strait of Hormuz's importance to LNG flows, after the halt in shipments through the strait reduced loadings from Qatar and the UAE by more than 60 billion cubic meters between March and October 2026, according to the International Energy Agency. The agency said global LNG supply is expected to contract 3%, or about 20 billion cubic meters, in 2026, the largest annual decline on record. From March to October, spot prices at the European gas hub rose about 70% year over year, to an average of about $20 per million British thermal units. European consumers rely on Norwegian pipeline gas for baseline consumption, while their facilities need LNG imports to cover the structural deficit and meet peak heating demand. That puts disruption to seaborne supplies at the center of European concerns as the heating season begins.
Storage levels show another dimension of the market's sensitivity to any further shortfall in shipments. Underground gas storage facilities in the European Union were about 74% full on November 3, below historical seasonal norms, according to the report cited by Investing.com. The International Energy Agency estimated that European inventories could fall below 10% of working capacity by the end of March 2027 if winter is colder than average and LNG flows through Hormuz remain disrupted. Goldman Sachs also tied market risks to the possibility of cold weather, putting at 45% the probability of a scenario in which Middle Eastern LNG supply falls during the winter of 2026-2027. The combination of low inventories and Europe's reliance on LNG imports makes the continuity of flows central to assessing the supply outlook.
Goldman Sachs raised its base-case forecast for European gas prices in the first quarter of 2027 to €74 per megawatt-hour, from €44 previously, and lifted its average forecast for 2027 to €51 from €32. On oil supply, the seven countries participating in the virtual OPEC+ meeting on November 1 decided to keep December's required production level at the September 2026 level. The group set its next meeting for November 29, 2026. In the oil market, Reuters reported that traders were awaiting the U.S. Energy Information Administration's weekly inventory report on Wednesday. These dates put supply developments and production policy among the factors the market will monitor in the coming period, alongside mediation efforts between Washington and Tehran.