UK Natural Gas Advances

UK natural gas prices rose further to above 144 pence per therm on Tuesday, a four-month high, as continued attacks between the US and Iran outweighed reports of diplomatic efforts to ease tensions. Tehran said it had received a proposal from mediators for a 10-day ceasefire aimed at reviving the interim deal reached last month. This comes as the US carried out a tenth consecutive day of strikes against Iran, while Tehran continued retaliatory attacks against neighboring countries. The renewed hostilities have brought tanker traffic through the Strait of Hormuz to a standstill and delayed the anticipated recovery in Qatari LNG exports, reducing available supplies and intensifying competition among European and Asian buyers for cargoes. This makes increasingly difficult for Europe to replenish reserves ahead of winter, with storage facilities currently around 53% full, compared with roughly 64% a year ago and about 15 percentage points below the five-year average.

UK natural gas prices jumped as high as 144.8 pence per therm to a four-month high earlier on Monday before paring gains to around 140.6, amid mounting fears of deeper supply disruptions as hostilities between the US and Iran escalated over the weekend. The US Central Command said on Sunday that it had carried out a fresh round of strikes against Iran for the ninth consecutive night, while Kuwait and Bahrain reported Iranian attacks. The conflict has widened beyond military targets to include bridges, utility infrastructure, and port facilities, increasing the risk of a return to full-scale war. Shipping activity through the Strait of Hormuz has largely come to a halt, with the US enforcing a naval blockade on Iranian ports and Tehran targeting vessels it says are violating its regulations. These supply risks, coupled with stronger demand for power generation, are making it more difficult for Europe to refill its vast storage facilities before winter.

UK natural gas prices rose toward 136 pence a therm on Friday, bringing weekly gains to nearly 16%, amid growing threats to Persian Gulf supplies as US-Iran attacks intensified. The US launched fresh strikes on Iran on Thursday, following previous attacks that struck an unladen oil tanker bound for Iran ports after the reimposition of a blockade. Tehran has countered with attacks targeting US military bases in neighboring countries and has reportedly called Yemen’s Houthi rebel group to shut the Red Sea export route if Washington targets Iranian power infrastructure. UK gas prices climbed to their highest in over three months and have surged over 30% in July so far, erasing an over 18% decline in Q2, as supply disruptions and strong power generation demand constrain Europe’s ability to rebuild inventories before winter. Supply concerns were exacerbated after Qatar, the Middle East's largest LNG exporter, halted plans to boost output after one of its tankers was attacked near Hormuz.