European wholesale natural gas prices climbed to their highest levels in more than a month on Tuesday as escalating tensions in the Middle East and new US shipping measures heightened concerns over global liquefied natural gas (LNG) supplies.
The front-month contract at the Dutch Title Transfer Facility (TTF), Europe’s benchmark gas hub, rose 3.3% to €56 per megawatt hour, breaking above recent trading ranges. The UK wholesale gas market also advanced, with front-month prices increasing 3.5% to 128.50 pence per therm.
The rally followed a sharp rise in global oil prices after renewed geopolitical tensions disrupted confidence in key maritime trade routes.
Hormuz Shipping Measures Fuel Supply Fears
Energy markets turned more defensive after US President Donald Trump announced the reinstatement of a naval blockade targeting Iranian shipping routes.
Adding to concerns, the US administration said it would impose a 20% cargo fee on commercial vessels transiting the Strait of Hormuz, the strategic waterway through which around one-fifth of global LNG shipments pass.
Following a third consecutive night of military strikes in the region, traders increasingly began pricing in the possibility of prolonged shipping disruptions and longer transit times for LNG cargoes from the Middle East.
Stronger Dollar Adds Pressure to European Buyers
The outlook for gas prices has also been influenced by expectations that US monetary policy could remain restrictive. Federal Reserve Governor Christopher Waller indicated that persistent inflation pressures may require interest rates to rise in the near term.
The prospect of higher US interest rates, together with the release of the latest US Consumer Price Index (CPI) data, has strengthened the US dollar.
A firmer dollar increases the cost of dollar-denominated LNG imports for European utilities, adding further upward pressure to regional gas prices. Investors are also closely watching incoming Federal Reserve Chair Kevin Warsh’s two-day testimony before Congress, which is expected to reinforce expectations of tighter global financial conditions.
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