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EMEA Natural Gas Update: Futures Rally After Iran Threatens to Target US Energy Companies

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European natural gas futures rose on Monday, hovering near their highest level in over three years, after Iran threatened attacks against US energy companies.

Front-month Dutch TTF futures rose 1.73% to 73.200 euros ($85.01) per megawatt-hour, while UK NBP futures gained 1.78% to 182.000 British pence ($2.46) per therm.

On Monday, Iran's Parliament Speaker Mohammad Bagher Ghalibaf warned of strikes against US oil and gas companies operating in the Middle East, in response to US threats, after Washington struck three Iranian oil tankers while they were transiting the Strait of Hormuz, according to a report by Al Jazeera.

In a tit-for-tat move, Tehran launched attacks against tankers, as well as ballistic missiles on US warships patrolling the region.

Traffic along the strategically crucial strait, which accounted for one-fifth of global LNG flows, inched higher on Sunday, with 21 vessels transiting, according to ShipFinder.

Meanwhile, signs of a potential recovery in Qatari LNG exports were emerging. Qatar was bringing empty LNG tankers back into the Arabian Gulf after weeks of chartering out vessels idled by the disruption, a move seen as laying the groundwork for a resumption of shipments, Bloomberg reported, citing ship-tracking data.

Daniel Hynes, a senior commodity strategist at ANZ, noted that Qatar hadn't sent even a single "LNG tanker through the key waterway since one of its tankers was hit by a missile in July," making this a significant new development for the markets.

This comes as Europe heads into the upcoming heating season, with inventories significantly below historic averages at 66.59% of capacity, compared to 79.20% 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 83.10%, according to the Swiss Federal Office of Energy.

However, weather forecasts are offering much-needed respite for the region, with a severe El Nino effect expected to result in a relatively mild winter across much of Europe, with less snowfall than normal across most lowland and mid-elevation areas, according to a report by Severe-Weather EU.

This is expected to ease demand for heating gas during the Winter, which remains constrained due to the prolonged conflict in the Middle East.

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