UK Natural Gas Futures Edge Down

UK natural gas futures fell toward 127 pence per therm, following declines in the European benchmark after Iraq agreed with Kurdistan to resume oil exports via a pipeline to Turkey’s port of Ceyhan, bypassing the Strait of Hormuz, while the US stepped up efforts to reopen the key route by targeting Iranian missile sites. Around 20% of global LNG normally passes through Hormuz, which has been largely shut since last month’s attacks, disrupting supply and keeping prices elevated. The timing is critical as Europe approaches its stockpiling season with storage levels about 15 percentage points below the five year average after a cold winter. This will require higher LNG imports over the summer. The UK remains particularly exposed due to limited storage capacity and heavy reliance on imports, increasing sensitivity to ongoing supply risks.

UK natural gas futures rose to over 125 pence per therm, resuming this month's surge that topped at the three-year high of 170 pence on March 9th, tracking European benchmarks as the war in Iran continued to threaten natural gas supply for major importers. Strikes between Iran, GCC countries, Israel, and US forces in the region drove Qatar to halt all of its LNG operations with no set date for their return, effectively removing 20% of global LNG supply. Additionally, exports from the UAE were halted as tankers have refrained from crossing the Strait of Hormuz. The increased competition for LNG bids from major economies drove the UK to increase its pipeline flows from Norwegian fields, while halting exports of surplus gas to Europe. Also, the UK government announced it was ready to step in and subsidize households with higher energy bills should gas and oil prices spike further or remain higher for a longer period.

UK natural gas futures dropped below 125 pence per therm, pulling back from a three-year high of 146.3 on March 9, after President Donald Trump signalled that the war with Iran could end soon. Additional reassurance came from G7 finance ministers, who said they are prepared to release strategic oil reserves if needed to stabilise supply. However, the Strait of Hormuz is still closed, while operations in Qatar have been suspended. Analysts warn that a prolonged halt in Qatari production could wipe out most of the global LNG supply surplus expected in 2026. Europe’s gas market is particularly exposed because storage levels were heavily drawn down during winter, meaning countries must now secure large volumes of LNG to refill reserves ahead of next winter. This could trigger strong competition with Asian buyers for limited cargoes. The UK is especially vulnerable due to its small storage capacity and strong reliance on imports.