European natural gas futures extended Monday's rally in after-hours trading, rising almost 4.7% on Tuesday as renewed US-Iran hostilities and uncertainty over shipping through the Strait of Hormuz fueled concerns over LNG supply flows.
The front-month Dutch TTF contract rose 4.651% to 53.660 euros ($61.34) per megawatt-hour, while the UK front-month NBP contract gained 4.752% to 130.05 British pence ($1.74) per therm.
Prices reached their highest levels in three and a half months, Montel reported.
The gains followed a sharp escalation in tensions between Washington and Tehran, with the US and Iran exchanging military strikes over the past 48 hours after Iran moved to enforce the closure of the Strait of Hormuz.
US President Donald Trump on Tuesday posted on Truth Social that the US had abandoned plans, announced a day earlier, to impose a 20% fee on vessels transiting the strait, replacing the measure with trade and investment commitments from Gulf states.
Trump said that the US-imposed naval blockade in Iran will be retained.
The developments have increased uncertainty about the ability of LNG cargoes to transit the strategic waterway and the conditions under which they can do so, making it more challenging for Europe to rebuild gas inventories ahead of the winter heating season.
Gas Infrastructure Europe put EU gas storage levels at 52.25% of capacity on Tuesday, compared with 63.02% a year earlier. Celsius Energy estimated EU inventories at 2,009 billion cubic feet, or 589 Bcf below the five-year average.
Analysts said European gas prices could rise above 100 euros/MWh, roughly double current levels, if the region experiences a severe winter while storage levels remain near five-year lows. However, the risk of physical supply shortages remains limited, Montel reported on Tuesday.