EMEA Natural Gas Update: Futures Mixed After Iran Violates Ceasefire, Attacks Ships in Hormuz
European natural gas futures were mixed on Tuesday, after reports of missiles fired on ships in the Strait of Hormuz on day one of President Donald Trump's Project Freedom.The front-month Dutch TTF contract was down 1.85% at 47.25 euros ($55.29) per megawatt-hour, while UK NBP futures were up 3.04% at 115.51 British pence ($1.56) as the markets were closed on Monday, due to the Early May Bank Holiday.Iran attacked a national carrier affiliated with the UAE's Adnoc on Monday, as it transited through the Strait, marking a dangerous escalation in the conflict.Meanwhile, US Centcom Commander Admiral Brad Cooper said on Monday that they had reached out to "dozens of ships and shipping companies" to encourage the flow of traffic through the strategically crucial waterway. "Our support for this defensive mission is essential to regional security and the global economy as we also maintain the naval blockade," he said.In a post on X, Iran's Foreign Minister, Seyed Abbas Araghchi, noted that "there's no military solution to a political crisis," while referring to Trump's Project Freedom as "Project Deadlock."Speaker of the Iranian Parliament, Mohammad Baqer Qalibaf, said on Tuesday that a "new equation" had emerged in the Hormuz, while placing the blame squarely on the US and its allies for the current situation, according to a report by state media outlet, Tasnim News.Traffic in the Strait witnessed an uptick, with 12 vessels transiting over the past 24 hours, according to the Hormuz Strait Monitor. However, this is still significantly below the typical daily average of 138.According to Daniel Hynes, a senior commodity strategist at ANZ, global LNG exports have hit their lowest levels in nearly two years, while noting that lost shipments from Qatar have been partially offset by higher exports from US and Canada.This comes at a critical time for European markets, as the region begins refilling gas inventories from depleted levels, at just 33.79% of capacity, compared to 40.73% during the corresponding period a year ago, and a five-year average of 46% for this period, according to Gas Infrastructure Europe.In a note on Tuesday, analysts at ING said that they continue to believe that European and Asian LNG markets were "underpricing the scale of the supply impact" from the ongoing Hormuz crisis.According to the analysts, there was little that could be done to offset or replace the lost LNG supplies via the Hormuz, besides "demand destruction," which they said required higher prices to materialize.