European natural gas prices surged to their strongest level since late 2022 on Thursday, driven by escalating Middle East tensions that have intensified concerns over prolonged supply disruptions and the state of winter fuel inventories. The benchmark gas futures contract advanced as much as 4.8%, extending its rally to a fifth consecutive session, while Asian market prices also climbed to multi-year highs not seen in over three years.

The upward momentum was further reinforced by a firmer oil market during Thursday's trading. With the US-Iran conflict already disrupting roughly one-fifth of global liquefied natural gas supplies, Iran has signaled its readiness to escalate military operations. US President Donald Trump has also indicated that the war may not conclude until after the November midterm elections in the United States.

The renewed escalation of hostilities in the Middle East, combined with expanded attacks on energy infrastructure by both Russia and Ukraine, has sharpened investor anxiety over supply security. While European gas prices remain well below the peaks witnessed during the 2022 energy crisis, they have more than doubled compared to pre-conflict levels, adding further strain to the region's economy as the winter season approaches.

"The likelihood of a short-term resolution to the Middle East conflict is becoming increasingly remote," noted Tom Marzec-Manser, head of European gas and LNG at Wood Mackenzie. He explained that this scenario will keep both oil and gas prices elevated, which "ultimately raises the cost of living across many parts of the world."

Europe has struggled to replenish its depleted gas inventories ahead of winter, with storage facilities currently sitting at approximately 67% capacity — the lowest level for this time of year since records began in 2009. The tightening global gas supply picture will heighten Europe's competition with Asia and other regions for cargoes, potentially pushing prices even higher as heating demand begins to rise.

As of 6:22 PM Amsterdam time, the Dutch month-ahead gas futures — the European benchmark — were trading 3.3% higher at €81.86 per megawatt-hour. The equivalent UK contract rose 3.8% to 205.22 pence per therm, having earlier touched its highest level since December 2022.