European natural gas futures were up on Monday, rebounding after a sharp decline over the past week, as US forces escalated their offensive against Iran, casting fresh uncertainty over a potential peace deal.
The Dutch TTF front-month contract was up 4.18% at 47.925 euros ($55.72) per megawatt hour, while the UK NBP front-month contract rose 5.17% to 116.520 pence ($1.57) per therm.
On Monday, US Centcom said that it had conducted "self-defense strikes" against Iranian radar, command and control sites for drones, located across the Goruk and Qeshm Islands.
This comes despite US President Donald Trump's claims that Tehran "really wants to make a deal" in a Truth Social post over the week, noting that the outcome would also be good for the US.
Meanwhile, the strategically crucial Strait of Hormuz, which accounted for one-fifth of global LNG flows, remained effectively closed for the 14th week running, with just 20 vessels transiting over the past 24 hours, according to the Hormuz Strait Monitor.
While this marks an uptick in traffic relative to recent days, when it was stuck in the low-to-mid single digits, it is still significantly below the Strait's typical daily average of 138 during normal times.
Daniel Hynes, a senior commodity strategist at ANZ, noted that Indian and Southeast Asian buyers were increasingly tapping the spot markets, to address growing energy needs during the Summer.
This puts European markets in a tough spot, with gas inventories, at 40.09% of capacity, still below the prior year's 47.89%, according to data from Gas Infrastructure Europe.
Inventories were also significantly below the five-year average for this period, at 54.1%, according to the Swiss Federal Office of Energy.
This comes at a time when much of the continent is experiencing an unprecedented heatwave, with the continent "currently warming at roughly twice the global average rate," according to a report by Severe-Weather EU, leading to increased air conditioning demand.
To make matters worse, a significant number of Norwegian oil and gas workers have signaled their intention to launch a strike, over wage negotiations, according to a Reuters report, citing labor union data. This puts flows from Europe's biggest supplier at risk.