UK natural gas futures climbed back above 125 pence per therm, extending this month's rally after having reached a three-year high of 170 pence on March 9th. The move followed gains in European benchmarks as the war in Iran continued to threaten natural gas supplies for major importers.
Escalating clashes involving Iran, GCC countries, Israel, and US forces in the region prompted Qatar to suspend all LNG operations indefinitely, effectively removing around 20% of global LNG supply from the market. At the same time, exports from the UAE have been halted, with tankers avoiding transit through the Strait of Hormuz.
In response to tighter LNG markets and stronger bidding from large economies, the UK has increased pipeline imports from Norwegian fields while suspending exports of surplus gas to continental Europe. In addition, the UK government signaled it is prepared to intervene and subsidize households facing higher energy costs if gas and oil prices spike further or remain elevated for an extended period.
