Natural gas prices in major European and British markets faced a 1.6% increase on Thursday, driven by dwindling hopes for a quick diplomatic solution in the disputes between the United States and Iran, creating new risks in the global energy market.
Price Increases and Their Impacts
The Dutch natural gas reference contract (TTF) traded at €74.50 per megawatt hour (MWh), with this increase attributed to prices falling to their lowest level in nearly three weeks.
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In the UK, the equivalent NBP contract also joined this trend, reaching 185.85 pence per therm. This increase in prices is considered due to persistent risks in liquefied natural gas (LNG) transit routes.
Geopolitical Factors and Their Impact on the Market
Market expectations, initially shaped by potential negotiations between the United States and Iran, quickly dissipated. U.S. President Donald Trump referred to Iran as a "regional bully" in his speech at the United Nations and raised the possibility of the "destruction" of the Islamic Republic if conflicts escalated.
Iran's military leaders and President Masoud Pezeshkian strongly rejected these threats, with the Revolutionary Guard stating that Tehran is prepared to deliver decisive retaliatory strikes and will never succumb to maritime blockades.
The deteriorating diplomatic situation overshadowed previous expectations for a quick peace agreement that could reopen the Strait of Hormuz and poses a threat to the long-term delays of Qatari and Persian Gulf LNG shipments to European import terminals.
According to recent data from Gas Infrastructure Europe (GIE), gas storage in the European Union has reached 70% of its capacity. While inventory injections continue, the current filling level is nearly 12% lower than the same time last year.
This ongoing shortfall in storage reinforces recent warnings from the European Central Bank that major energy price volatility poses a continuous risk to consumer inflation and increases pressure on central bank policies as the summer season approaches.
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