European natural gas prices surged to their highest level since the end of 2022 after renewed US strikes on Iran heightened concerns about prolonged disruption to energy flows from the Persian Gulf. Dutch front-month futures, Europe’s benchmark, reached 73.85 euros per megawatt-hour in early European trading and stood at 72.2 euros at press time, up roughly 25% over the past month, according to the Wall Street Journal. The rally follows already-weak storage levels: EU gas stocks were 63% full in the final week of August, compared with an 80% average for late August in recent years. Gas analyst Greg Molnar said storage could reach only 72 billion cubic meters at the current injection pace, leaving inventories 20%, or 19 billion cubic meters, below the five-year average and at their lowest level since 2013. He said the shortfall was increasing the risk of winter price volatility. Higher energy costs also lifted eurozone inflation to 3.3% in the year to August from 2.9% in July, while energy inflation accelerated to 14.3% and core inflation eased to 2.4%. Tensions around the Strait of Hormuz have further clouded the outlook for liquefied natural gas (LNG) exports, with about 20% of global LNG shipments passing through the waterway. ING analysts said Europe currently outbids Asia for cargoes after shipping costs, but competition could intensify if Qatari volumes remain absent through year-end. Goldman Sachs analysts said the benchmark may need to exceed 100 euros per megawatt-hour if Middle East exports recover only gradually through 2027. Morningstar analyst Tancrede Fulop told CNBC that a cold winter could push prices to 90-120 euros. Asian equities fell after the strikes, while Bitcoin also reacted to the escalation.