Oil & Energy
EMEA Natural Gas Update: Futures Rally Amid Fresh Tensions, Attacks Along Strait of Hormuz
European natural gas futures rallied on Wednesday as military tensions once again escalated along the Strait of Hormuz, adding to concerns of global supply constraints.The front-month Dutch TTF contract gained 3.87% to trade at 48.380 euros ($55.21) per megawatt hour, while UK NBP futures rose 4.47% to 115.700 British pence ($1.55) per therm.As reported by, Iranian forces struck a Qatari LNG tanker, Al Rekayyat, in the Strait of Hormuz during the early hours of Tuesday. Two other commercial vessels were also struck in the Strait, just days after the US and Iran signed a Memorandum of Understanding.The US has since responded with "powerful strikes" against Iran, with Tehran responding in kind, saying that it had targeted "85 US military installations" in retaliation, according to an Al Jazeera report.Meanwhile, US President Donald Trump, who had said that the MoU signed with Iran was "over" on Wednesday, added that this does not necessarily signal the end of negotiations between the two countries, which assuaged some market concerns.Traffic through the strategically crucial Strait of Hormuz, which accounted for one-fifth of global LNG flows, continued to remain elevated, with 34 vessels transiting over the past 24 hours, according to the Hormuz Strait Monitor.However, according to Daniel Hynes, a senior commodity strategist at ANZ, recovery LNG traffic through the strait has lagged behind oil so far, with the recent attacks making matters worse for global LNG markets.Hynes attributed this to LNG voyages requiring greater confidence from "insurers, shipowners and buyers," since they often involve highly specialized vessels and cargoes.These recent developments are particularly concerning for European markets due to their low inventories, at just 50.63% of capacity, compared to 60.65% the corresponding period a year ago, according to Gas Infrastructure Europe.Inventories were also significantly below the five-year average for this period, at 65.7%, according to the Swiss Federal Office of Energy.However, the International Energy Agency expects global gas demand to decline in 2026, due to tighter supply fundamentals, as countries across the world pursue alternatives, such as gas-to-coal transitions in response to the ongoing crisis.
