European natural gas futures rallied on Wednesday, reaching their highest level since December 2022, as the conflict in the Middle East escalated, with both the US and Iran exchanging strikes along the Strait of Hormuz.
Front-month Dutch TTF futures rose 3.86% to 78.765 euros ($91.67) per megawatt-hour, while UK NBP futures gained 4.09% to 196.520 British pence ($2.66) per therm.
On Tuesday, the US Centcom said in a post on X that it destroyed five Iranian oil tankers in response to Iran's Revolutionary Guard Corps targeting a US Navy ship with ballistic missiles, "twice over the past two days."
Iran responded by launching missile attacks on US forces stationed at the Al Azraq base in Jordan, while claiming to have carried out additional strikes on at least two US vessels and eight tankers in the region, causing what it described as "great damage," according to a report by Al Jazeera.
Despite this, however, traffic through the strait edged higher with 23 transits on Tuesday, according to ShipFinder.
Daniel Hynes, senior commodity strategist at ANZ, said Qatar sent its first LNG cargo through the Strait of Hormuz since July.
He highlighted disruptions to Norwegian and Algerian flows as major facilities entered maintenance, weighing on Europe's ability to refill inventories ahead of the heating season.
European gas inventories remained below historic averages, at 67.12%, compared to 79.48% during the corresponding period a year ago, according to Gas Infrastructure Europe.
Inventories were also significantly below the five-year average for this period, at 83.5%, according to the Swiss Federal Office of Energy.