European natural gas futures were up on Tuesday, after the Iranian Revolutionary Guard Corps Navy expanded its definition of the Strait of Hormuz to encompass a much wider area.
The front-month Dutch TTF contract rose 2.15% to 47.22 euros ($55.47) per megawatt-hour, while the UK NBP front-month contract gained 2.79% to 116.59 British pence ($1.58) per therm.
Mohammad Akbarzadeh, the deputy political director of the IRGC Navy said on Tuesday that the strategically critical Strait was no longer limited to the area around "islands such as Hormuz and Hengam," and would instead stretch from between the city of Jask in the east to Siri Island in the west, according to a Reuters report.
This comes following Trump's decision to reject Iran's response to the US-backed ceasefire proposal, calling it "totally unacceptable" in a Truth Social post on Sunday.
On Monday, while addressing reporters from the Oval Office, Trump said that the current ceasefire between the US and Iran was at its "weakest," adding that it was on "massive life support," suggesting greater potential for an escalation in hostilities.
Meanwhile, the Strait of Hormuz, which handled one-fifth of global LNG flows before the conflict, remained effectively closed for the 11th week running.
While there was an uptick in traffic, with 17 vessels transiting over the past 24 hours, according to the Hormuz Strait Monitor, it is still far below pre-war daily traffic of about 138.
These supply disruptions coincide with the European gas stockpiling season, with inventories significantly depleted, at just 35.4% of capacity, compared to the five-year average for this period at 47.8%, according to data from the Swiss Federal Office of Energy.
According to Daniel Hynes, a senior commodity strategist at ANZ, the situation has been made worse by an unplanned outage at Norway's Hammerfest LNG plant, along with an unseasonably cool weather hitting large parts of Europe, which is increasing heating demand.