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EMEA Natural Gas Update: Futures Edge Higher Amid Uncertainty Over US-Iran Peace Talks

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European natural gas futures were up on Wednesday, touching a two-week high, following a breakdown in talks between the US and Iran, reigniting supply concerns.

The front-month Dutch TTF contract gained 0.99% to 43.875 euros ($50.02) per megawatt-hour, while the UK NBP front-month rose 0.53% to 105.000 British pence ($1.38) per therm.

This comes as direct talks between the two sides break down, with US envoys Steve Witkoff and Jared Kushner set to meet only with mediators, rather than the Iranian delegation, according to a Reuters report.

Meanwhile, the strategically crucial Strait of Hormuz, which accounted for one-fifth of global LNG flows, has remained effectively shut for over four months, with just five vessels transiting over the past 24 hours, according to the Hormuz Strait Monitor.

To make matters worse, QatarEnergy extended its force majeure, which means it would be unable to meet contractual obligations, particularly at the Adriatic LNG terminal, until early September.

Daniel Hynes, a senior commodity strategist at ANZ, said that this was "adding nervousness to an already volatile market," while noting that abnormal heat was set to hit Western Europe this week, leading to increased cooling demand and energy consumption.

European gas inventories remained depleted, at just 48.86% of total capacity, compared with 58.59% in the same period a year ago, according to data from Gas Infrastructure Europe.

Inventories were also significantly below the five-year average for this period, at 63.5%, according to the Swiss Federal Office of Energy.

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