EU Natural Gas Extends Rally

European natural gas prices rose above €59 per MWh on Wednesday, rebounding after two consecutive sessions of losses, as fresh hostilities in the Middle East deepened concerns over prolonged supply disruptions. The US and Saudi Arabia conducted joint military strikes against Iran-backed groups in Iraq, accusing them of being behind drone attacks on Saudi oil facilities, prompting Iran to warn that holding it responsible for the attacks would be a "major miscalculation." The strikes came just hours after Washington said it had intercepted multiple missiles launched by Tehran targeting US troops in the region, ending a days-long lull in fighting. The latest escalation worsens Europe’s gas supply outlook as the region races to replenish storage ahead of the winter. Supply worries were compounded by reports that QatarEnergy, one of the world's largest LNG exporters, has extended its force majeure for European buyers until at least the end of September.

European natural gas prices fell to around €57 per MWh on Tuesday after plunging more than 8% in the previous session, as President Donald Trump expressed optimism about diplomatic efforts to ease tensions with Iran. Trump said on Monday that the US and Tehran were having "good talks" and that there was a chance of reaching a deal, but he warned that US strikes would resume if negotiations failed. His comments followed a pause in hostilities between the two sides to allow room for diplomacy. Despite this, concerns over Europe’s gas supply persist, with the bloc's storage levels at risk of falling short of its winter refill targets. The renewed escalation of the conflict in early July disrupted the recovery of LNG exports from Qatar, the Middle East’s largest LNG supplier, and with shipping through the Strait of Hormuz still largely blocked, it remains uncertain when additional supplies from the region could reach global markets.

European natural gas prices dropped more than 8% to around €58 per MWh on Monday, pulling back from a four-month high as the pause in US-Iran hostilities reduced concerns over deeper supply disruptions. The US halted further attacks on Iran since Friday after 13 consecutive nights of strikes, prompting Tehran to suspend its retaliatory operations. The pause came as Iranian and Omani officials held talks on shipping through the Strait of Hormuz. However, concerns over Europe’s gas supply security ahead of winter remain, as the near-closure of the Strait curtailed LNG flows from the Persian Gulf, intensifying competition with Asian buyers. Hot weather across the region has also boosted electricity demand. European gas storage facilities were currently 54.2% full, well below the 65% level recorded a year earlier, and Equinor, the bloc’s largest gas supplier, warned last week that Europe is unlikely to reach its target of 80% storage capacity before the start of winter.