European natural gas prices shot up dramatically in early March 2026 when the U.S. and Israel entered into conflict with Iran. Within a week, the main European gas benchmark—called TTF—had jumped 67%, its biggest weekly leap since 2022. The trigger was straightforward: reports that Qatar, which supplies a lot of Europe's liquefied natural gas, might halt shipments due to the conflict (WSJ).

Why does Qatar matter so much? In 2022, Russia invaded Ukraine and cut off the pipeline gas that Europe had relied on for decades. Europe needed a replacement fast. Liquefied natural gas, or LNG, shipped in tankers from Qatar became Europe's most important backup supply. All those Qatari tankers have to pass through the Strait of Hormuz—a narrow shipping lane where any military conflict can threaten traffic. When the Iran war began, traders worried Qatari LNG shipments might get blocked. That fear alone sent prices soaring (Bloomberg).

European leaders moved quickly. By mid-March, the EU was considering a price cap to control the shock (Bloomberg). Banks like HSBC raised their price forecasts for the rest of 2026 and into 2027. Brussels even stepped back from some climate goals to manage the energy crisis (Reuters).

By late May, tensions eased. The U.S. and Iran began talks, and by mid-June an interim agreement was in place (Holland & Knight). Prices fell from their March peaks. But they did not drop all the way back. By June, gas prices were about 31% higher than they had been before the conflict started—roughly 10 euros per megawatt-hour above January levels (Reuters).

The difference between a 67% spike and a 31% sustained increase is the difference between panic and a new reality. The spike happened because traders got scared all at once and started buying furiously—that's a temporary event. But the 31% bump that stuck around four months later means the market genuinely thinks the risk of supply disruption is now higher than it was in January. That higher price gets baked into contracts between utilities and factories, which eventually shows up in people's energy bills and broader inflation numbers. The initial panic faded; the repricing of risk did not.