Europe gas and power bills may rise on Hormuz fears

The immediate trigger is geopolitical: high gas prices are being driven by the US confrontation with Iran and a sharp curtailment of oil and liquefied natural gas exports through the Hormuz chokepoint. That has already pushed European gas benchmarks above 70 euros per megawatt hour, while wholesale electricity prices are also elevated on the exchange.

For investors, the story cuts across utilities, energy-intensive industries and the broader inflation trade. Higher gas and power prices can support European energy producers and traders, but they also pressure manufacturers, chemicals groups, retailers and consumers, while reviving expectations for firmer inflation prints and less room for central banks to ease.

The policy and market backdrop is different from 2022, however. Europe has reduced its dependence on pipeline gas from Russia, and the new LNG supply wave from the US, Canada, Mozambique, Southeast Asia and Qatar should eventually cap the rally, the expert said. He argued that even if Hormuz disruptions persist, prices are likely to resume a downward path over time as new export capacity comes online.

That mix leaves the near term vulnerable but the medium term less dire than the post-invasion spike. Traders will be watching winter demand, Hormuz access and the pace of LNG capacity additions for the next move in European gas and power prices.