LONDON (Realist English). Europe’s gas market returned in July to levels last seen at the height of the war with Iran.
TTF benchmark prices exceeded €62 per MWh during trading on July 22, and the day before prices had been approaching the peak values of the early conflict, when futures reached €60–65 in March.
The price has risen by about 35% since the start of the month, and by more than 70% since the war began in February 2026.
The Return of the Geopolitical Premium: Why Gas Is Getting More Expensive
The main driver of the rise is the resumption of hostilities between the US and Iran following the collapse of the June ceasefire. As of July 22, the two sides had exchanged eleven consecutive nights of airstrikes, while Iran and its Houthi allies are striking commercial vessels in the Strait of Hormuz and the Bab el‑Mandeb.
The Iranian threat to close the Bab el‑Mandeb — the alternative route Saudi Arabia had been using to bypass Hormuz — is adding to market tension. Insurers have already raised war risk premiums for vessels in the region.
Competition for LNG is also putting upward pressure on prices. US exporters are increasingly sending cargoes to Asia because of higher prices there, forcing European buyers to pay more to attract additional volumes.
Storage: Critical Summer Shortfall
As of July 21, European underground gas storage facilities were only 54.2% full, compared with 65% on the same date last year. The deficit from the five‑year average stands at 15.6 percentage points. In absolute terms, storage holds 57.2 billion cubic metres — 12 billion less than a year ago.
Injection rates in July were among the lowest since 2011. The reasons are not only high prices but also physical constraints: heatwaves in Europe have boosted gas consumption for air conditioning, while reduced supply via the Strait of Hormuz has slowed LNG deliveries.
To meet the European Commission’s target of 90% full by December 1, Europe needs to inject at least 68 billion cubic metres. At current rates, storage is projected to reach only 70–75% — a level analysts describe as “dangerously close to the threshold below which supply security is at risk.”
Forecasts: Goldman Sachs Warns of “Slim Margin”
Goldman Sachs raised its Q3 2026 TTF price forecast to €60 per MWh, and its Q4 forecast to €53, up from previous estimates of €41 and €40 respectively.
Goldman Sachs analyst Samantha Dart said: “Given our assessment of the tightness in European winter gas balances, leaving little room for error, we expect TTF to trade near the €65 per MWh threshold through the end of summer.”
The bank projects that by the end of October (the start of winter), Northwest European storage will be only 67% full (previously 74%), and by the end of March 2027 it will stand at 28% under average temperature conditions.
In the event of a prolonged recovery in Gulf exports beyond 2027, Goldman Sachs estimates that TTF could exceed €100 per MWh.
European officials are already discussing possible government intervention to ensure supply security if prices remain at the €60 level.
The European gas market has entered a critical phase. The geopolitical premium embedded in prices is unlikely to fade until the Gulf conflict ends, while the storage deficit grows by the day.
As ICIS notes, if tensions persist in the coming months, the gas storage shortfall and steady Asian demand will push spot prices higher through the end of the year.
