UK Natural Gas Rises Further

UK natural gas prices rose further to 140 pence per therm on Friday, recovering most of the losses recorded earlier in the week as renewed tensions in the Strait of Hormuz heightened uncertainty over the resumption of LNG flows from the Persian Gulf. Iranian state media reported that naval forces had carried out an operation against “hostile targets” near the strait following explosions heard on Qeshm Island. Tehran is also reportedly seeking to restrict US and Israeli vessels from transiting the waterway under a proposed agreement with Oman, while demanding compensation from countries it views as hostile before allowing passage. Ongoing disruptions to LNG shipments from key exporters such as Qatar have kept global supply conditions tight, intensifying competition with Asian buyers for available cargoes and complicating Europe’s efforts to rebuild gas inventories ahead of winter.

UK natural gas prices rose toward 131 pence per therm on Thursday, rebounding from a three-week low amid persistent concerns over the outlook for gas supplies. While risk premiums eased after Iran announced it had reached an agreement with Oman on a proposed shipping route through the Strait of Hormuz, LNG supply risks remained elevated. Gas shipments through the key waterway continue to face significant disruptions, delaying cargoes from major exporters such as Qatar. These delays have complicated Europe's winter stockpiling efforts, while strong competition from Asian buyers has further tightened LNG availability. At the same time, unusually hot weather across central and southern Europe has added to market pressures by increasing electricity demand for air conditioning. EU gas storage facilities are currently just under 58% full, the lowest seasonal level in nearly two decades for this time of year.

UK natural gas prices dropped to 128 pence per therm on Wednesday, marking a third consecutive day of declines and the lowest level in three weeks, as markets weighed prospects of a renewed Middle East deal that could reopen the Strait of Hormuz and restore gas supplies from the Persian Gulf. Qatar said mediation efforts between the US and Iran have reached an advanced stage, with a draft proposal already prepared, while American officials expressed optimism that an agreement could soon be reached. However, concerns persist in Europe amid low gas inventories, with the region’s storage levels now at their lowest for this time of year in almost two decades. With roughly one-fifth of global LNG supply still disrupted by the conflict and Asian buyers competing aggressively for available cargoes, analysts anticipate European gas prices to remain elevated, leaving the market highly sensitive to any delays or setbacks in ongoing diplomatic negotiations.