European Gas Prices Rise 19.1% in July as LNG Cargoes Forced onto Alternative Routes

European natural gas prices rose by 19.1% during July in a direct inflationary wave caused by LNG shipments from the Gulf being forced to avoid the Strait of Hormuz and take longer, more expensive alternative routes.

These alternative routes added extra days to tanker voyage times and significantly raised freight costs, directly impacting spot gas prices on European exchanges and sparking widespread concern in energy-intensive industrial sectors.

Some European countries rushed to activate emergency plans involving negotiations for additional gas import contracts from Norway and the United States, in an attempt to diversify supply sources and avert an energy crisis in the upcoming winter.

Analysts warn that the European repercussions of the Hormuz crisis could extend to heavy industries and manufacturing, with expectations of further increases in energy prices — especially if the crisis coincides with an early winter cold snap.

What do these terms mean?

Spot Gas Price: The price traded in markets for immediate, spot purchases, as opposed to futures contracts whose prices are determined in advance. It is one of the most sensitive indicators to supply emergencies.

LNG Carriers: Specialized vessels equipped with insulated tanks that keep gas in its liquid state at extremely low temperatures during long maritime transport voyages.

European TTF Exchange: The primary market for natural gas trading in Europe; its prices reflect expectations and concerns regarding the continent's energy supplies and serve as the main benchmark for contract pricing.