UK Gas Prices Hold Advance

UK natural gas prices dropped below 115 pence a therm on Thursday but held on to most of the recent gains, as the latest escalation in US-Iran tensions heightened concerns over fresh disruptions to LNG supplies from the Persian Gulf. US forces carried out additional strikes on Iran on Wednesday night, shortly after President Trump declared the end of the eight-week ceasefire. In response, Tehran launched a large-scale wave of missile and drone strikes against American bases in Kuwait, Qatar, and Bahrain. The flare-up in tensions followed Iranian attacks on vessels in the Strait of Hormuz, which prompted the US to reimpose sanctions on Iranian oil sales. Any renewed disruption to energy flows through the strait, a key transit route for roughly one-fifth of global oil and LNG trade, could make it more difficult for Europe to replenish gas storage facilities to adequate levels ahead of the heating season.

UK natural gas prices rose further to above 116 pence a therm on Wednesday, the highest in almost a month, as renewed tensions in the Middle East stoked fears of a new wave of supply disruptions. Iran said it had attacked US military bases in Bahrain and Kuwait after Washington launched strikes on Iranian targets and revoked a license permitting the country to sell oil. The US actions came in response to attacks on three merchant vessels in the Strait of Hormuz. The fresh attacks threaten the interim deal reached last month that had reopened the vital shipping route. Additional support came from forecasts of an intense heatwave across parts of Northwest Europe, which is expected to boost electricity demand for air conditioning and increase gas-fired power generation. This comes amid a slower-than-usual pace of seasonal storage replenishment. Moreover, flows from Norway, currently the region's largest single pipeline supplier, fell slightly after seasonal maintenance was extended.

UK natural gas prices jumped over 5% to above 110 pence a therm on Tuesday, recovering from the previous session's losses after reports that a Qatari LNG tanker was attacked while exiting the Strait of Hormuz. Iranian state TV said that the vessel came under attack after disregarding warnings, though it did not explicitly claim responsibility. Earlier, two commercial ships were reportedly hit by Iranian missiles, putting the agreement aimed at ending attacks in the strait to the test. Further supporting prices, weather forecasts indicate that another spell of extreme heat is set to hit Northwest Europe, which is expected to significantly boost air-conditioning use and power demand. The increase in demand comes as the region’s gas inventories remain relatively low, with storage facilities currently around 49% full, well below the nearly 60% level recorded at the same time last year. This heightened concerns over whether Europe will be able to rebuild sufficient reserves ahead of winter.