European natural gas futures rose more than 5%, climbing back above €31 per megawatt-hour amid renewed geopolitical tensions, after having hit a five-week low near €29.88 on February 17. The gains were driven by mounting concerns over potential disruptions to LNG and oil flows through the strategic Strait of Hormuz. Iran’s Revolutionary Guard conducted military exercises in the strait, including a temporary closure for drills, highlighting how escalating frictions with the United States could jeopardize key energy corridors and inject an additional risk premium into energy markets.
Political uncertainty was reinforced by comments from US Vice President JD Vance, who said recent nuclear negotiations with Iran did not address US “red lines” and stressed President Donald Trump’s right to resort to military action should diplomacy fail. In contrast, Iran’s foreign minister characterized the talks as “constructive,” and further rounds of negotiations are anticipated.
On the fundamentals side, EU gas storage remains tight, with inventories below 34%, the lowest level since 2022. Germany’s storage is under 24%, leaving the European market particularly vulnerable to any supply shocks.
