UK Natgas Hovers Near Multi-Year Highs Amid Supply Concerns

UK natural gas prices hovered around 198 pence per therm on Wednesday, remaining close to 2022 highs as supply concerns persist ahead of the winter heating season. Military tensions have kept the Strait of Hormuz largely inaccessible to commercial shipping, keeping Qatari LNG export flows severely restricted and limiting supplies to Europe. European gas storage facilities are around 68% full, still below the seasonal average at a time when inventories would typically be nearing maximum capacity. Concerns over supply security have been reinforced by JERA Global CEO Yukio Kani, who warned that Europe’s low inventories leave the region vulnerable to prolonged disruptions and stronger competition for LNG cargoes. At the same time, scheduled maintenance at Norwegian gas facilities is temporarily reducing pipeline supplies to Europe, further tightening near-term supply.

UK natural gas prices fell toward 203 pence per therm on Tuesday but remained near their highest level since late 2022, amid intensifying disruptions around the Strait of Hormuz and concerns over still-below-normal gas inventories. The strait remains closed to most commercial traffic amid ongoing military conflict and security threats, while diplomatic efforts to secure its reopening have stalled, raising fears that disruptions to shipments could persist. LNG tanker traffic through the Strait has fallen sharply, tightening global supplies and intensifying competition with Asia and other buyers for available cargoes. Meanwhile, ongoing maintenance at Norwegian gas facilities is also adding another layer of uncertainty to Europe’s winter supply balance. Europe’s gas storage levels stand at around 68% of capacity, still below the seasonal average at a time when inventories would typically be close to maximum capacity.

UK natural gas prices surged 5% to above 208 pence per therm on Monday, the highest level since December 2022, as tensions in the Middle East persist. Saudi Arabia has temporarily closed a critical oil pipeline after drone attacks, while an advance by Yemen’s Houthis fueled concerns over further disruptions to global energy supplies. Meanwhile, a meeting scheduled for later today between Iran and Gulf states to discuss a potential agreement to reopen the Strait of Hormuz was postponed. Europe is struggling to rebuild its gas inventories, with storage levels remaining below historical norms amid curtailed LNG supplies from the Persian Gulf. Although the European Commission recently said there is no immediate risk to gas security this winter, a prolonged disruption to Gulf LNG supplies could tighten global supply further, forcing European buyers to compete more aggressively with Asia, potentially driving prices even higher as heating demand begins to rise.