European natural gas futures gained more than 3% in early Tuesday trade as the continued escalation in hostilities between US and Iran and the resumption of the US naval blockade of Iranian ports dented hopes of a normalization of traffic through the Strait of Hormuz.
The front-month Dutch TTF contract rose 3.56% to 53.095 euros ($61.48) per megawatt-hour, while the UK front-month NBP contract gained 3.59% to 128.61 British pence ($1.72) per therm.
Dutch TTF futures passed the 53 euros per MWh level for the first time since April 7, according to Trading Economics data.
The renewed conflict between Iran and the US has abruptly halted the gradual recovery in liquefied natural gas exports from the Middle East and raised fears of new disruptions to gas exports from the region, Trading Economics said.
ANZ analyst Daniel Hynes said that major producer Qatar delayed increasing LNG production due to safety concerns after one of its tankers was attacked.
"The latest events will make it increasingly difficult for Europe to refill its storage facilities heading into the norther hemisphere winter. Current storage levels sit at 52%, well below the normal seasonal level of 67%," according to ANZ analyst Daniel Hynes.
The US Central Command on Monday said it will recommence the blockade of maritime traffic entering and exiting Iranian ports from 4pm ET Tuesday. This follows an initial US blockade from April 13 to June 18.
President Trump said that the US will serve as the "guardian" of the Strait of Hormuz, while Central Command continues a sustained campaign of strikes against Iranian military targets to degrade their ability to threaten commercial traffic.
According to media reports citing Iran's Islamic Revolutionary Guard Corps, the IRGC has targeted US forces and key facilities through missiles and drone attacks in Jordan and Bahrain.
"The market continues to move higher this morning following the US reimposing a blockade on Iran, generating plenty of uncertainty over LNG flows from the Persian Gulf," research firm ING said in a note.
"Europe is looking vulnerable heading through the injection season, with storage just 52% full, well below the 5-year average of 68%. JKM's continued premium to TTF is prompting LNG cargoes to be redirected to Asia, leaving Europe tighter," the note said.