European natural gas futures locked in a fourth straight weekly gain after breaching war-era highs earlier in the week. Strikes near the Strait of Hormuz have driven a geopolitical risk premium into gas prices, while European storage lags its seasonal average heading into winter.
European natural gas futures inched higher Friday, locking in a fourth consecutive week of gains after surging past conflict-driven highs to touch their highest levels since 2023. The front-month Dutch TTF contract held near 72.50 euros per megawatt-hour. That puts the benchmark on track for a weekly gain of over 8%.
In Great Britain, the NBP wholesale gas contract held firm near 179 pence per therm as UK traders played catch-up following Monday's bank holiday. That caps a weekly advance of over 9%.
Strait of Hormuz strikes drive the risk premium
Direct military strikes between U.S. forces and Iran crippled commercial tanker transit through the Strait of Hormuz earlier in the week, embedding a geopolitical risk premium across forward curves. Washington maintains that international shipping lanes remain open, but satellite tracking data shows commercial vessel traffic through the strait operating at a small fraction of normal pre-war levels. The disruption threatens approximately 20% of global LNG supplies, predominantly from Qatar.
President Donald Trump warned of harder retaliatory strikes against Iranian infrastructure, including threatening targeted actions against Kharg Island, and trading desks see little immediate prospect of a diplomatic breakthrough. As a result, European utilities are bidding against Asian buyers to secure replacement Atlantic basin cargoes, setting an elevated floor under global LNG spot prices.
Storage refill lags the seasonal average
European underground storage caverns are filled to roughly 62% of capacity, lagging the five-year seasonal benchmark, according to Gas Infrastructure Europe data. Summer heatwaves that drove gas-fired power generation across Southern Europe, routine offshore pipeline maintenance in Norway, and delayed Qatari LNG shipments have constrained storage replenishment through August.
Energy costs complicate the ECB's rate path
The sustained gas rally, together with Brent crude holding firm past $90 a barrel, has reinforced cost-push inflation fears ahead of the European Central Bank's Governing Council meeting on Sept. 10. Preliminary August data showed eurozone core inflation easing to 2.4%. Headline CPI accelerated to 3.3% year-on-year. That was driven primarily by a 14.3% surge in energy components.
The persistence of energy-driven price pressure keeps pressure on policymakers to hold a hawkish posture, as central bankers weigh the risk of unanchored price expectations against signs of slowing regional economic growth.
Source: Investing.com
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