UK natural gas futures jumped by more than 20% on Monday, approaching the 100 pence per therm level, in line with sharp moves across global energy markets after the outbreak of war in Iran raised the risk of disruptions to oil and gas supplies from the region. US forces launched strikes on Iranian territory in an effort to force regime change, triggering retaliatory attacks by Tehran on US allies across the Middle East.
While there have been no reported strikes on natural gas infrastructure, including LNG export facilities, LNG operators and shipping companies have suspended key shipments through the Strait of Hormuz. The strait handles around one-fifth of global LNG trade, including major volumes from Qatar, which supplies about 15% of Europe’s LNG imports. Reduced gas flows from the region are therefore intensifying European competition for Norwegian gas deliveries to the UK.
At the same time, UK domestic gas storage levels were below 30% of capacity at the end of February, heightening the market’s exposure to external supply shocks.
