Europe is grappling with sky-high LNG prices not seen since January 2023 as the continent braces for winter with storage levels dipping.

LNG buyers in north-west Europe were forking over $22.83 per 1 mn British thermal units in late August, a price twice as high as a year ago.

The Strait of Hormuz, a key chokepoint in the global LNG trade, remains closed as negotiations between Iran and the US continue. Close to one-fifth of global LNG supply passes through the strait as supply from Qatar, the world’s second-largest supplier, and the United Arab Emirates must exit the strait.

Mediators are ramping up attempts to get the strait opened. However, Tehran has remained adamant that Washington will need to meet its list of conditions before the strait is opened for commercial traffic.

According to data from Kpler, only eight LNG tankers passed through the strait in July. Prior to the Middle East conflict erupting, daily traffic ranged between 120 to 140 ships per day exiting the strait.

Europe has found itself in a particularly vulnerable position. Gas storage levels before the Middle East conflict were already lower than normal as trade relations soured with the US amid President Donald Trump’s threats of tariffs and annexation of Greenland from Denmark.

In early August, Europe’s underground gas storage facilities were only a little over half full, with Germany and the Netherlands both below half full at 47% and 38% respectively.

Italy’s gamble in July to load up on LNG appears to be a shrewd one if the Strait of Hormuz is not opened shortly.

Italy was the bloc’s largest importer of the super-cooled gas in July, the first time it had held that title since ship-tracking data compiled by Bloomberg was recorded, which dates back to 2017.

With Italy’s power sector the most dependent on gas in Europe, Rome chose to protect itself against further volatility and crippling high winter prices.