European wholesale gas benchmarks traded near recent highs on Tuesday as fresh security risks in Middle Eastern shipping lanes sustained price pressure despite some diplomatic engagement signals emerging between Washington and Tehran.
The Dutch front-month contract, the benchmark for European gas, was trading around 57.50 euro per megawatt-hour (MWh), remaining near four-month peaks touched late last week. The British wholesale gas equivalent also held close to its highest level since late March.
Market participants have built in a geopolitical risk premium following a new naval blockade declared by Yemen's Houthi movement targeting Saudi Arabia. That escalation compounded anxieties that resumed after a commercial vessel burned when it was struck near the Strait of Hormuz earlier this month.
Shipping continues to transit the region under naval supervision, but heightened security concerns and rising war-risk insurance premiums have increased immediate costs for seaborne trade, adding to near-term supply risk for global LNG flows.
In a research note published on Tuesday, Goldman Sachs highlighted the mounting pressure on European energy balances. The bank raised its near-term TTF price forecasts to 60 EUR/MWh for the remainder of the third quarter and to 53 EUR/MWh for the fourth quarter.
Goldman now assumes Persian Gulf LNG exports will not normalize until October 2026 and estimates a net reduction in global balance-of-summer supply of 16 million tonnes per annum as a result. The firm warned that disruption at this scale could leave Northwest European underground gas storage at just 67% full heading into winter - the lowest end-summer level in at least 14 years.
Goldman Sachs also cautioned that European gas prices could need to rise toward or remain near 65 EUR/MWh to deter Asian demand and safeguard European storage refill objectives. Under a more prolonged scenario where Middle Eastern exports normalize only gradually through 2027, the bank said December 2026 TTF prices might have to spike above 100 EUR/MWh - more than 110% above its base case - to avert severe stockouts, particularly if winter temperatures are colder than average.
Analysts note that European energy infrastructure remains particularly exposed to Persian Gulf disruptions after the loss of Russian pipeline supplies over recent years. Continental utilities now rely heavily on flexible seaborne LNG cargoes to replenish underground storage ahead of the winter heating season.
At present, European storage levels sit near 40% capacity. Market commentators warn that any prolonged rerouting of LNG carriers around Africa's Cape of Good Hope will keep landing costs elevated and further pressure the supply chain for the region.
Key context and implications
- Benchmark Dutch front-month gas around 57.50 EUR/MWh, near four-month highs; British contract near highest since late March.
- Goldman Sachs raised TTF forecasts to 60 EUR/MWh for the remainder of Q3 and 53 EUR/MWh for Q4, and projects delayed Persian Gulf LNG normalization to October 2026 with a 16 million tpa net summer supply reduction.
- Potential for Northwest European storage to be just 67% full entering winter - the lowest end-summer level in at least 14 years; current European storage is near 40% capacity.
Sectors affected - European utilities, LNG shipping and insurance markets, and broader energy-intensive industries reliant on stable gas supplies.
Risks and uncertainties
- Continuation or escalation of disruptions to Persian Gulf LNG exports could materially reduce summer supply and pressurize storage refilling efforts - affecting utilities and wholesale gas markets.
- Prolonged rerouting of LNG tankers around the Cape of Good Hope would raise landing costs and add logistical strain to seaborne LNG supply chains - impacting shipping, insurers, and end-users.
- Colder-than-average winter temperatures combined with delayed export normalization could necessitate extreme price spikes, potentially exceeding 100 EUR/MWh for December 2026 TTF under Goldman Sachs' stressed scenario.
The combination of renewed maritime threats, higher shipping and insurance costs, and constrained LNG flows keeps Europe’s gas market sensitive to developments in the Persian Gulf. Market participants and regional buyers will be monitoring exports, storage trajectories, and insurance markets closely in the coming months as they assess winter preparedness.