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EMEA Natural Gas Update: Futures Surge After Trump Threatens Iran With Retaliatory Strikes

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European natural gas futures rose sharply on Wednesday, as the conflict between the US and Iran escalated, with US President Donald Trump issuing a fresh warning to Tehran.

The front-month Dutch TTF contract rose 4.48% to 62.335 euros ($71.16) per megawatt-hour, while the front-month UK NBP contract climbed 4.47% to 151.030 British pence ($2.02) per therm.

On Wednesday, in a post on X, US Central Command said that it had completed the 11th consecutive day of strikes against Iran, targeting the country's military infrastructure, to diminish Tehran's ability to target commercial vessels along the Strait of Hormuz.

In retaliation, Tehran launched more strikes against US bases and military installations located across Bahrain, Kuwait and Jordan, according to a report by Al Jazeera.

In a Truth Social post on Wednesday, Trump warned that any time Tehran strikes a commercial vessel transiting via the Hormuz, the US would strike a bridge or power plant in Iran, marking the latest escalation in the conflict.

Meanwhile, traffic along the strait, which accounted for one-fifth of global LNG flows before the conflict, held steady at 16 transits on Tuesday, according to data from ShipFinder.

Daniel Hynes, a senior commodity strategist at ANZ, said Europe's supply outlook was becoming increasingly precarious as hotter weather across Asia revived Chinese demand, intensifying competition for cargoes and making it more difficult for EU countries to refill gas reserves ahead of winter.

European gas inventories stood at 54.20% of capacity, compared to 65.08% during the corresponding period a year ago, according to data from Gas Infrastructure Europe.

Inventories were also significantly below the five-year average for the period, at 69.7%, according to the Swiss Federal Office of Energy.

At the same time, the heatwave in Europe is continuing to intensify, with regions across the Iberian Peninsula, particularly Spain, set to see potentially record-breaking temperatures of over 45 to 47 degrees Celcius this week, as "a stubborn heat dome of high pressure anchors itself over southwestern Europe," according to Severe Weather EU.

This is making the task of refilling inventories harder, as rising space cooling demand requires more gas consumption to generate electricity for it.

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