European natural gas prices have surged to their highest level in three years, driven by traders rushing to replenish inventories ahead of the winter season while market participants await clarity on a potential agreement between Iran and Oman concerning shipping traffic through the Strait of Hormuz.

The region's benchmark gas futures climbed as much as 3.4% on Tuesday, reaching a level not seen since January 2023. Although Tehran has indicated that a deal with Oman is imminent and would include the establishment of a temporary safe passage route, the market remains uncertain about how the United States might respond following its weekend strikes on Iranian oil tankers, leaving the risk of vessel attacks elevated.

Additional uncertainty was introduced by attacks on Saudi Arabian energy infrastructure, which have also contributed to pushing oil prices higher.

Analysts at Timera Energy noted in a report that the European gas market is entering the winter season with unusually low storage levels, leaving little room to absorb further supply or demand shocks. Europe is effectively competing with Asia for liquefied natural gas cargoes by allowing prices to rise.

As of 11:50 a.m. Amsterdam time, the benchmark Dutch front-month futures contract was trading 2.4% higher at €75.10 per megawatt-hour.