European natural gas prices rebounded. Just as the region is about to enter the peak winter heating season, a fresh round of ship attacks in the Strait of Hormuz has once again stirred market concerns about tight supply.
Benchmark gas futures followed oil prices higher, gaining as much as 3.8% after a sharp drop in the previous trading session.
Iran's state-run media IRIB reported that a very large crude carrier struck a sea mine in the Hormuz area, but did not disclose the vessel's name or the time of the incident.
Attacks on oil and gas transport ships have increased in recent weeks, keeping geopolitical risks elevated.
At the same time, Europe's gas storage levels are far below normal, making the region increasingly dependent on liquefied natural gas; in a tight global cargo market, buyers may need to raise bids to secure sufficient cargoes.
Tuesday's session saw violent swings, with prices briefly topping 90 euros per megawatt-hour for the first time since late 2022; they then retreated on profit-taking and unverified reports about Iran-U.S. ceasefire talks.
Iranian Foreign Minister Abbas Araghchi said overnight that Iran is still communicating with the United States through intermediaries, but Washington should first accept "the conditions previously proposed."
Warmer weather this month has given European energy companies a buffer window, with October storage injections faster than in the same period of previous years.
But overall EU gas storage stands at only about 75%, versus a five-year seasonal average of 89%; France, Austria and other countries even saw small net withdrawals this week.
Senior analyst Patricio Alvarez wrote in a research note that European gas demand may fall 4% compared with last winter and 14% compared with the 2021/22 winter, but low storage levels still leave the region highly vulnerable to weather changes and LNG transport disruptions.
He said that even with a "demand cushion," European gas prices still risk breaking above 100 euros.
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