European natural-gas prices surged to their highest level since the end of 2022 as escalating hostilities between the U.S. and Iran fuel worries about prolonged disruptions to energy flows. Dutch front-month futures—Europe’s benchmark—rise 2.3% to 73.85 euros a megawatt-hour in early European trading, and are up 25% on the month. Increasing tensions in the Persian Gulf are clouding prospects for a recovery in regional LNG exports, adding to concerns over Europe’s gas supply as storage levels trail seasonal norms.

Europe is currently a more profitable destination for LNG cargoes than Asia once shipping costs are taken into account, according to analysts at ING. But as the winter approaches, “competition between the two regions is likely to pick up, particularly if Qatari LNG remains largely absent from the market through year-end.”.