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EMEA Natural Gas Update: Futures Soar Nearly 3% Amid Resurgence in US-Iran Hostilities

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European natural gas futures continued to surge on Wednesday amid the resurgence in hostilities between the US and Iran, along with attacks against commercial vessels transiting the Strait of Hormuz.

Front-month Dutch TTF contracts rose 2.80% to 74.240 euros ($85.95) per megawatt hour, while UK NBP futures climbed 2.77% to 183.220 British pence ($2.47) per therm.

On Tuesday, the US Centcom said that it had completed a series of strikes against Iran's Islamic Revolutionary Guard Corps targets. This included air defense sites, radar systems, maritime assets, mine-laying capabilities and communication sites, according to a post on X.

This, they said, was in retaliation against attempted strikes by the IRGC against commercial shipping along the strait and US service members positioned in the region.

Meanwhile, Iran's Supreme Leader Mojtaba Khamenei warned that the country's armed forces have "unforgettable lessons" in store for the US, in his first message since fighting restarted, according to an Al Jazeera report.

Traffic along the strategically crucial Strait of Hormuz, which accounted for one-fifth of global LNG flows, stood at 13 on Tuesday, according to ShipFinder.

Daniel Hynes, a senior commodity strategist at ANZ, noted that European natural gas prices had hit their highest level since January 2023, due to the resumption of the conflict.

He cautioned that LNG flows, which were already "at a standstill," were set to get a lot worse following the latest escalation, with Qatar, the world's largest exporter of the commodity, becoming more cautious about resuming exports, while demand continued to mount from Asian buyers.

This comes amid persistently low European gas inventories at 65.39% of capacity, compared to 77.65% 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 82.1%, according to the Swiss Federal Office of Energy.

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