European natural gas futures have surged to €40 per megawatt-hour, marking a sixth consecutive increase and reaching their highest point since early April. This rise comes amid escalating tensions between Israel and Iran, sparking concerns about potential disruptions in vessel traffic through the critically important Strait of Hormuz. The strait is pivotal for global energy trade, with approximately 20% of the world's liquefied natural gas (LNG) passing through it. The possibility of Iran targeting tankers in this region is becoming a significant worry for traders. Adding to the market's anxiety, Qatar, a key LNG exporter, has advised some vessels to remain outside the strait until they are prepared to load. Although southbound ships have been moving without delay, several northbound tankers are currently on standby. This geopolitical tension has also pushed oil prices up, reflecting the elevated risk to these vital trade routes.
In addition to these geopolitical concerns, Europe is experiencing unusually hot weather, which is boosting the demand for natural gas used in air conditioning. Meteorological forecasts predict the continuation of above-average temperatures, further contributing to the upward pressure on gas prices.
