European natural gas prices rebounded Monday as uncertainty over shipping through the Strait of Hormuz outweighed early signs of diplomatic progress between Iran and Oman. Dutch and British benchmark contracts both climbed more than 2%, while EU storage lags historical norms heading into winter.
European natural gas prices jumped Monday as uncertainty over shipping through the Strait of Hormuz outweighed early signs of diplomatic progress, reminding energy desks of Europe's persistent vulnerability to global supply bottlenecks. Benchmark Dutch front-month futures rose 2.9% to around 56.90 euro per megawatt-hour, recouping part of last week's losses. British wholesale contracts advanced 2.6% to 139.50 pence per therm.
Iran-Oman deal stalls on US conditions
The rebound follows reports that a draft agreement between Iran and Oman on new shipping channels through the Strait of Hormuz is in its final stages. However, Tehran has maintained the strait will only fully reopen once additional U.S. conditions are met. The unresolved demands mean an immediate normalization of Persian Gulf LNG traffic remains out of reach, keeping global supply balances tightly stretched.
European storage lags amid summer heat
As a result, the delays continue to slow summer deliveries from major Middle Eastern exporters such as Qatar, complicating Europe's push to build a buffer before the winter heating season begins. EU gas storage caverns entered mid-August filled to roughly 56% capacity, lagging historical averages for this time of year. Unseasonably warm summer temperatures across southern Europe have compounded the shortfall, as air-conditioning demand pushed power generators to burn natural gas rather than divert it into storage.
European utilities now compete directly with Asian importers for uncommitted spot LNG cargoes. Because of this, energy analysts expect European natural gas contracts to hold a firm floor, leaving the market sensitive to any further friction in Persian Gulf negotiations.
Source: Investing.com
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