UK Natural Gas Prices Rebound

UK natural gas prices rose above 150 pence a therm on Wednesday, rebounding from the previous session’s losses, as doubts grew over the likelihood of an agreement to resume energy flows through the Strait of Hormuz. Supply concerns persisted despite Pakistan’s defense minister saying that the US and Iran were “close to some sort of arrangement” over the waterway, while negotiations between Tehran and Oman were also reportedly making significant progress. Both Washington and Tehran had taken a firmer stance, clouding prospects for a swift reopening of the strait. The ongoing disruption to shipping has severely constrained LNG shipments, with cargoes from major exporter Qatar significantly delayed. Analysts expect European gas prices to maintain a firm floor until storage levels show clearer signs of building ahead of the heating season. Hot weather across Europe is also boosting electricity demand for cooling, adding further pressure to the market.

UK natural gas prices fell toward 143 pence a therm, as hopes for progress in US-Iran negotiations eased concerns over energy supplies. Pakistan’s Defense Minister Khawaja Asif said the two sides were “close to some sort of arrangement,” while talks between Iran and Oman over reopening the Strait of Hormuz were reportedly at an advanced stage. A deal could help restore LNG flows through the Persian Gulf and reduce pressure on European gas markets. Despite the optimism, Commerzbank raised its year-end European gas price forecast to €50/MWh from €45/MWh, while Uniper expects prices to remain around €50-€60/MWh as long as Hormuz remains closed. European storage levels recently fell to the lowest seasonal levels in records going back to 2009, heightening concerns over winter supplies. Meanwhile, persistent European heatwaves are boosting power demand and adding further pressure to gas markets.

UK natural gas prices extended sharp gains on Tuesday, rising to 151 pence per therm, as the prospect of a deal to reopen the Strait of Hormuz faded amid demands from the US and Iran. President Trump on Monday called for Iran to compensate for people it has killed in conflicts, after Tehran sought compensation for damage caused by US and Israeli attacks. This tempered hopes for an immediate resolution that would restore LNG flows through the Persian Gulf. The ongoing disruption has tightened global LNG supplies, intensifying competition with Asian buyers and hampering Europe’s efforts to replenish gas stockpiles ahead of winter. European storage levels recently fell to their lowest seasonal levels in records going back to 2009, heightening concerns over winter supplies. Traders also monitor the extended supply cuts at the Ormen Lange gas field in Norway, Europe’s largest pipeline supplier, as this could further tighten Europe’s already strained gas market and amplify price volatility.