Key takeaways
- European benchmark gas prices gained more than 30 per cent in July, ending a three-month losing streak.
- EU gas storage finished the month at roughly 55 per cent capacity, below historical averages and last year’s level.
- Conflict involving the U.S. and Iran has threatened LNG shipments through the Strait of Hormuz, including supplies from Qatar.
- Higher energy prices have lifted oil-industry earnings, with Exxon Mobil and Chevron reporting sharply increased second-quarter profits.
European natural gas prices recorded their strongest monthly performance since March as conflict in the Middle East intensified concerns about liquefied natural gas supplies and Europe’s ability to rebuild reserves before winter.
The Dutch front-month contract at the TTF hub, Europe’s principal gas benchmark, traded at approximately €57.60 per megawatt-hour Friday. Britain’s comparable contract stood near 141 pence per therm.
Although prices were relatively steady during the session, TTF gas gained more than 30 per cent over July. That marked its first monthly increase in four months and reflected a sharp change in sentiment following three consecutive monthly declines.
Iran conflict puts LNG shipments at risk
The rally was driven primarily by the expanding military confrontation involving the U.S. and Iran, including American and Saudi strikes against Iran-backed targets, Iranian missile launches and further U.S. attacks inside Iran.
These events have increased the risk surrounding the Strait of Hormuz, through which a substantial share of the world’s oil and LNG normally travels. Qatar, one of Europe’s important LNG suppliers, depends on the waterway to move exports from the Persian Gulf.
Any prolonged reduction in Qatari shipments would leave European buyers competing more aggressively with Asian markets for flexible LNG cargoes. That competition could keep European prices elevated even if immediate shipping conditions improve.
Europe falls behind on winter storage
Europe’s limited storage buffer has added to the market’s vulnerability. EU facilities ended July approximately 55 per cent full, considerably below their five-year average and the level recorded at the same point in 2025.
Hot weather across central and southern Europe has raised electricity demand for air conditioning. This has redirected gas into power generation, slowing injections into underground storage sites.
The official winter heating season begins November 1, leaving European utilities with a narrowing window to rebuild reserves. If storage remains below normal heading into autumn, households and energy-intensive industries could face sustained price pressure.
The combination of low inventories, uncertainty surrounding Middle Eastern exports and competition from Asian LNG buyers is expected to keep TTF futures volatile through August.
Oil majors benefit from higher energy prices
While consumers and businesses face rising costs, major oil producers have reported substantial earnings gains from higher crude and refined-product prices.
Exxon Mobil Corporation (NYSE:XOM) said its second-quarter profit doubled to US$14.53 billion, while revenue increased 42 per cent to US$116.02 billion. Chevron Corporation (NYSE:CVX) nearly quadrupled its profit to US$12.07 billion as revenue rose 56 per cent to US$70.06 billion.
Chevron’s refinery profit was six times higher than a year earlier, despite the company processing less crude and selling fewer products. U.S. refineries with reliable crude supplies have benefited from shortages elsewhere and elevated margins for diesel, gasoline and jet fuel.
“The return on refining, on a percentage basis, has skyrocketed,” Texas Christian University energy-finance professor Tom Seng said. “Oil right now is priced what it is priced because of the Iran war. But in the meantime, the refineries are making money hand over fist.”
The divergent outcomes underscore the wider economic effects of the conflict: energy companies with production and refining assets outside the Persian Gulf can benefit from higher prices, while Europe faces more expensive imports and a harder path towards securing adequate winter supplies.