Brent Surges Above $104, European Gas Tops €80 as Energy Supply Risks Intensify

Global energy markets extended their gains on Thursday, with Brent crude rising above $104/bbl and European natural gas remaining above €80/MWh as escalating US-Iran hostilities and growing LNG supply risks raised concerns over global energy availability.

Oil shipments through the Strait of Hormuz remain well below pre-war levels, while Europe is also dealing with reduced Qatari LNG availability, unusually low gas inventories and renewed uncertainty over Russian LNG supplies.

Brent Rises as Hormuz Disruption Continues

At the time of writing, November Brent crude futures were trading at $104.77/bbl, up 3.52%, while October WTI futures gained 3.75% to $99.65/bbl. Brent had already moved above $100/bbl in the previous session, extending its increase to nearly 30% from early-August lows.

The latest rise followed another escalation in the six-month US-Iran conflict. Iran said it attacked 10 ships near the Strait of Hormuz on Wednesday after the US sank five Iranian oil tankers, while the IRGC threatened additional retaliation.

Traffic through Hormuz continues to remain significantly below pre-war levels. At the same time, intensified Houthi attacks on Saudi Arabia have added further supply risks in the Red Sea.

Physical crude markets have also strengthened. According to LSEG data cited by Reuters, Dated Brent, the benchmark used to price roughly two-thirds of global crude supplies, has traded above $100/bbl since September 3.

Stronger Chinese crude purchases in recent weeks have provided additional support to prices. Analysts warned that a sustained increase in Chinese buying could amplify the impact of any further supply disruptions.

European Gas Surpasses €80 as LNG Risks Increase

European natural gas prices have also climbed to levels not seen in more than three years. Dutch TTF futures breached €80/MWh on Wednesday, reaching as high as €80.99/MWh, their highest level since January 2023.

Gas prices have more than doubled since the Middle East conflict began, as disruptions to Qatari LNG shipments through Hormuz coincide with unusually low European inventories ahead of the winter heating season.

Fresh concerns over Russian LNG supplies emerged this week following a reported drone attack in Russia’s Yamal region. While the extent of the damage remains uncertain, Yamal LNG supplies around 5% of Europe’s gas demand, meaning a prolonged disruption could further tighten an already constrained market.

Reduced Middle Eastern LNG flows, uncertainty around Yamal supplies and depleted European inventories could force Europe to compete more aggressively with Asian buyers for alternative LNG cargoes.

With winter approaching, sustained high oil and gas prices could increase pressure on European industrial and household energy costs, while also reviving concerns over broader inflation.

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