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EMEA Natural Gas Update: Futures Rally After Iran Attacks Two Tankers in Strait of Hormuz

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European natural gas futures rose on Friday as the US and Iran continued to trade strikes, with Tehran hitting two tankers in the Strait of Hormuz.

The front-month Dutch TTF contract was up 2.40% to 59.715 euros ($68.68) per megawatt-hour. The front-month UK NBP contract was up 2.83% to 146.500 British pence ($1.97) per therm. Both Dutch TTF and UK Gas were set to end the week down by 5.93% and 5.73%, respectively, according to Trading Economics.

On Friday, Iran's Islamic Revolutionary Guard Corps said that they had struck two oil tankers in the strait, for attempting to transit via an unauthorized route, according to a report by Iran's Tasnim News. The IRGC also said that four other tankers were forced to change course and immediately return to their previous positions.

Meanwhile, commercial vessel traffic along the crucial Strait, which accounted for one-fifth of global LNG flows, remained steady with 19 transits on Thursday, according to ShipFinder.

According to Daniel Hynes, a senior commodity strategist at ANZ, traders in Europe remain concerned about refilling the region's gas reserves before the next heating season, as supply constraints continue to mount.

Europe's gas inventories remained below historic levels at 56.39%, compared to 67.94% a year ago, according to Gas Infrastructure Europe.

Inventories were also significantly below the five-year average for this date at 72.5%, according to the Swiss Federal Office of Energy.

This comes as Europe braces for another unprecedented heatwave, with temperatures expected to go north of 40 degrees Celsius, possibly even to 45 degrees across parts of Western, Central and Mediterranean Europe in August, according to a report by Severe Weather EU.

As a result, space-cooling demand across the region and gas-fired power generation are expected to remain elevated in the near-term, weighing on gas refiling efforts.

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