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EMEA Natural Gas Update: Futures Rally After Latest US Strikes, Trump's Warning to Iran

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European natural gas futures were up on Wednesday, hovering near their highest levels in over three months, as tensions continued to mount in the Middle East, adding to supply constraints.

The front-month Dutch TTF contract rose 3.40% to 54.760 euros ($62.56) per megawatt-hour, while the UK front-month NBP contract gained 3.43% to 132.540 British pence ($1.77) per therm.

On Wednesday, US Central Command said that it had conducted "an additional round of strikes against Iran" in a post on X, targeting military installations near the country's coastal regions, along the Strait of Hormuz. This was just hours after US forces resumed the naval blockade against Tehran.

In a Truth Social post, US President Donald Trump warned that Iran was headed towards "total destruction," while noting that the Hormuz was open to all ship traffic, besides Iran.

Trump also said that he was replacing the 20% US reimbursement fee, which he had floated earlier this week, in favor of trade and investment deals with various Gulf states.

Despite the latest escalation in the conflict, traffic along the strategically crucial Strait, which accounted for one-fifth of global LNG flows, remained elevated, with a total of 30 vessels transiting over the past 24 hours, according to data from ShipFinder.

Daniel Hynes, a senior commodity strategist at ANZ, warned that this will "undoubtedly increase the difficult process of refilling storage facilities in Europe ahead of the next winter heating season," as the bloc would have to compete with Asia, which is battling high Summer temperatures.

Hynes cited China's latest commodity trade data to back his views, noting that gas imports into the country continued to recover in June, reaching 10.9 million tonnes.

European gas inventories remained depleted, at just 52.52% of capacity, compared to 63.02% 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 67.8%, according to the Swiss Federal Office of Energy.

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