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EMEA Natural Gas Update: Gas Prices Extend Rally as Middle East Tensions Threaten LNG Supply

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European natural gas futures extended Monday's rally in after-hours trade Tuesday as ongoing conflict in the Middle East raised concerns that traffic through the Strait of Hormuz could remain disrupted for the foreseeable future.

Front-month Dutch TTF contracts rose 4.815% to 73.170 euros ($84.78) per megawatt hour, while UK NBP futures climbed 9.665% to 180.75 British pence ($2.44) per therm.

Tuesday's gains follow a sharp rally Monday triggered by US military strikes on Iran over the weekend, despite diplomatic efforts to de-escalate the conflict.

Strikes continued on Tuesday as well, with the US military confirming attacks in an X post.

"Today at 12 p.m. ET, US forces began striking Islamic Revolutionary Guard Corps (IRGC) targets in Iran. The strikes follow recent attempted attacks by the IRGC against commercial shipping in the Strait of Hormuz and against American service members deployed to the region," US Central Command posted on X on Tuesday.

Iranian President Masoud Pezeshkian reportedly said Tuesday that Tehran was prepared to return to a ceasefire agreement reached with Washington in June if the US did the same.

Separately, Saudi Crown Prince Mohammed bin Salman, the country's de facto ruler, met with Oman's Sultan Haitham bin Tariq to discuss efforts to maintain regional security and stability, according to news outlets.

Despite those efforts, European gas prices climbed to their highest level since January 2023 as renewed US-Iran tensions heightened concerns over the security of European gas supplies ahead of the heating season, Trading Economics said.

Competition with Asia for liquefied natural gas cargoes has also intensified amid renewed clashes between the US and Iran, putting further upward pressure on gas prices, Natural Gas Intelligence said Monday.

US LNG exports to both Europe and Asia increased on a volume basis in the first half of 2026 compared with the first half of 2025, according to the US Energy Information Administration.

However, the vast majority of the cargoes went to Asia. Exports to Europe rose by 0.1 Bcf/d, or 1%, while exports to Asia increased by 2.3 Bcf/d, or 108%, the EIA said Tuesday.

Looking ahead, European gas prices could rise by a further 19%, or about 13 euros/MWh, if the Strait of Hormuz traffic remains constricted, even with the El Nino weather phenomenon expected to contribute to a mild European winter, Montel reported.

Europe's gas storage levels remain below both last year's levels and the five-year average. Inventories stood at 69.05% of capacity, compared with 77.38% at the same point a year earlier, according to Gas Infrastructure Europe. The Swiss Federal Office of Energy put the five-year average for this period at 81.9%.

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