UK Gas Prices Spike as European Markets Face Storage Shortfalls
United Kingdom natural gas prices surged over 150% this year amid Strait of Hormuz supply risks, even as broader European prices dipped due to lower Chinese demand.
Natural gas prices in the United Kingdom rose to 187 pence a therm, marking an increase of over 150% since the start of the year. This spike is driven by supply risks in the Strait of Hormuz linked to the Iran war, which has disrupted the transit of approximately 20% of liquefied natural gas (LNG) shipments. The UK remains particularly vulnerable due to limited storage capacity and a heavy reliance on seaborne LNG imports, with current deliveries 4% lower than the previous year on a 30-day average.
In contrast, broader European prices recently dropped toward €71 per megawatt-hour, a one-month low. This decline followed an 8% year-over-year decrease in Chinese LNG demand for September, as high prices driven by Middle East conflict discouraged spot purchases in China.
Despite the price dip in some markets, the European Union faces significant pressure to rebuild inventories before winter. EU storage facilities are currently 71% full, well below the five-year seasonal average of 87%, with Germany's levels sitting just above 57%. Amid these disruptions, QatarEnergy extended force majeure on LNG supplies to Italy's Edison until December and to Pakistan until November, citing shipping difficulties in the Strait of Hormuz.
