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EMEA Natural Gas Update: Futures Rise Over 3% as US-Iran Stalemate Clouds Hormuz Reopening

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European natural gas futures rallied on Wednesday as the prolonged stalemate between the US and Iran dimmed prospects for a near-term resumption of energy flows through the Strait of Hormuz.

Front-month Dutch TTF futures rose 3.27% to 60.655 euros ($69.98) per megawatt-hour, while UK NBP futures soared 3.04% to 148.610 British pence ($2.01) per therm.

On Wednesday, Iran's newly appointed Supreme National Security Council chief, Mohsen Rezaei, said in a post on X that the Strait would remain closed until the US ends its war and blockade against Iran, releases all frozen Iranian assets, and agrees to a regional ceasefire encompassing Lebanon and Gaza.

"Until all conditions are met, the Strait will remain closed," he warned, further dimming hopes for a swift resolution to the conflict.

Traffic along the strategically crucial Strait, which accounted for one-fifth of global LNG flows, held steady at 18 transits on Tuesday, according to ShipFinder.

Daniel Hynes, a senior commodity strategist at ANZ, highlighted a surge in LNG loadings by Qatar, with the 10-day moving average of the Ras Laffan facility at 10 kilotonnes.

He, however, noted that their eventual exports relied on safe transit via the Hormuz, which continued to remain effectively closed. Hynes also noted Europe's increasingly precarious position, with the region's gas inventories nowhere near its target of 90% before the start of the heating season, as gas imports continued to dwindle starting in April this year.

European gas inventories stood at just 59.40% of capacity, compared to 72.01% 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 76.2%, according to the Swiss Federal Office of Energy.

Meanwhile, several European countries are bracing for disruptions to solar power generation from Wednesday's solar eclipse, prompting warnings from grid operators including the UK's National Energy System Operator, Spain's Red Electrica and the Netherlands' TenneT.

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