European natural gas prices remain elevated as Middle East shipping risks support market

Gas markets stay close to multi-month highs

European wholesale natural gas prices remained close to their highest levels in several months on Tuesday as renewed security concerns surrounding key Middle Eastern shipping routes continued to support prices despite ongoing diplomatic contacts between the United States and Iran.

The Dutch front-month TTF contract, Europe’s benchmark for natural gas, traded around €59.3 per megawatt-hour (MWh), remaining close to the four-month high reached during the previous session. In the UK, the equivalent front-month wholesale gas contract rose 1.3% to 143.30 pence per therm, its strongest level since late March.

Houthi announcement revives concerns over energy transport

Risk premiums remained firmly embedded in European gas markets after Yemen’s Houthi movement announced a new naval blockade targeting Saudi Arabia.

The development renewed concerns about the security of major maritime energy routes only days after a commercial vessel caught fire following an attack near the Strait of Hormuz.

Although commercial shipping continues to move through the region under naval protection, tighter security measures and higher war-risk insurance costs have increased the expense of transporting energy cargoes.

Diplomatic efforts fail to calm gas markets

The latest escalation comes even as reports indicate that diplomatic communication between Washington and Tehran continues following nine consecutive days of military operations.

While hopes of renewed negotiations briefly eased pressure on crude oil markets, natural gas traders remain cautious, recognising that any disruption in the Persian Gulf could significantly affect global liquefied natural gas (LNG) exports.

The Strait of Hormuz remains one of the world’s most important energy chokepoints, carrying roughly 20% of global LNG shipments, the majority of which originate from Qatar.