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EMEA Natural Gas Update: Futures Climb as Middle East Conflict Deepens, Storage Lags

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European natural gas futures extended gains in after-hours trade on Friday, climbing to their highest level in nearly four months as escalating military action involving the US and Iran heightened concerns over global energy supplies.

The front-month Dutch TTF contract rose 6.672% to 58.440 euros ($66.86) per megawatt-hour, while the front-month UK NBP contract gained 6.683% to 140.800 British pence ($1.89) per therm.

Trading Economics said European natural gas prices climbed to their highest level in nearly four months, as intensifying US-Iran attacks increased threats to Persian Gulf energy supplies.

CNBC reported that Iran on Friday claimed it had targeted US military forces in Syria and Bahrain, broadening its military response as the US completed its sixth consecutive night of strikes on Iran.

US Central Command said it had carried out another major wave of attacks overnight, striking dozens of military targets.

Energy markets are also watching the Bab el-Mandeb Strait after Iran reportedly urged Yemen's Houthis to prepare to close the chokepoint if US strikes target Iranian power infrastructure.

Oil flows through the strait averaged 7.4 million b/d in June, up from 4.2 million b/d a year earlier, according to Reuters, citing Kpler data.

Trading Economics said that European gas prices have surged over 15% this week and over 29% so far in July.

The rally reflects mounting risks of supply disruption and stronger demand from the power sector, which are limiting Europe's ability to replenish gas inventories ahead of the winter heating season.

According to Gas Infrastructure Europe, European gas storage facilities were 53% full, compared with 63.61% during the same period last year.

Inventories also remained well below the five-year average of 68.3% for this time of year, according to the Swiss Federal Office of Energy, underscoring concerns about Europe's storage refill pace ahead of winter.

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