European wholesale natural gas prices moved higher on Monday morning as renewed geopolitical tensions in the Middle East raised concerns about the security of global liquefied natural gas supply routes.
The benchmark Dutch front-month gas contract advanced 1.6% to €41.38 per megawatt-hour, while the equivalent UK contract also gained 1.6%, reaching 99.29 pence per therm.
The gains followed renewed military tensions between the United States and Iran around the Strait of Hormuz, one of the world’s most important energy shipping corridors. Although both countries agreed to temporarily halt retaliatory military action ahead of technical talks scheduled for Tuesday in Doha, traders remained concerned that any renewed escalation could disrupt LNG shipments and delay maritime traffic.
Weather and Economic Outlook Support Prices
The latest rise comes despite broader market fundamentals that had previously limited price gains. European gas storage facilities remain well supplied, helping to offset some of the risks associated with tighter global markets.
However, updated weather forecasts pointing to above-average temperatures across southern Europe have added further support to prices. Higher summer temperatures are expected to increase demand for gas-fired electricity generation as air conditioning use rises, potentially tightening short-term supply.
Investors are also monitoring the wider economic backdrop. Rising energy prices have revived concerns about inflation ahead of several key economic events later this week, including the release of U.S. non-farm payrolls data and a speech by European Central Bank President Christine Lagarde, both of which could influence expectations for future interest rate decisions.
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