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EMEA Natural Gas Update: Futures Rally as Middle East Conflict Escalates

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European natural gas futures edged higher on Thursday as the conflict in the Middle East continued to escalate, adding to concerns regarding the region's gas supplies.

Front-month Dutch TTF futures rose 1.14% to 80.150 euros ($93.27) per megawatt-hour, while British NBP futures gained 1.18% to 200.000 British pence ($2.71) per therm.

On Wednesday, Iran said that it had struck 10 vessels along the Strait of Hormuz, in response to US attacks against five Iranian oil tankers, marking the biggest wave of attacks in the region, since the conflict began over six months ago, according to multiple media reports.

Meanwhile, US President Donald Trump said that he believed the war would end "immediately" after the country's midterm elections in November.

"I think the war will end immediately after the election" because Iran "can't hold out any longer," he said, while talking to reporters outside Air Force One on Wednesday.

Traffic along the Strait of Hormuz held steady, with 21 transits being recorded on Wednesday, according to data from ShipFinder.

Daniel Hynes, a senior commodity strategist at ANZ, noted that European supply constraints continued to mount amid Ukrainian drone attacks targeting Russia's Yamal LNG facilities, which still covers 5% of the region's gas needs, while Middle Eastern flows continued to be disrupted.

This comes at a time when European gas inventories remained under pressure, at just 67.33% of capacity, compared to 79.73% 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 83.7%, according to the Swiss Federal Office of Energy.

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