European Gas Prices Secure Fifth Weekly Gain on Middle East Supply Risks

European wholesale natural gas prices fell on Friday as traders took profits, but benchmarks still capped a fifth straight week of gains fueled by growing geopolitical risks in the Middle East that threaten to disrupt global energy supplies.

The front-month Dutch TTF contract, Europe's gas benchmark, ended the session down 2.5% at approximately €77.60 per megawatt-hour (MWh). Despite the daily decline, the contract surged 12.1% for the week, according to the source. In the UK, the equivalent NBP contract fell 1.5% to 195.00 pence per therm but finished the week with a 12.6% gain.

Middle East Tensions Drive Risk Premium

The sustained price rally reflects a significant geopolitical risk premium baked into the market. Traders are closely watching escalating military engagements between U.S. forces and Iran, which have reportedly restricted tanker traffic through the Strait of Hormuz.

This maritime chokepoint is critical for global energy security, handling about 20% of the world's liquefied natural gas (LNG) flows, primarily from Qatar. The source noted that recent events, including U.S. strikes on Iranian tankers and an Iranian attack on a U.S. base, have intensified supply anxieties. Furthermore, the seizure of Yemen's port of Mocha by Iran-aligned Houthi militants has extended maritime risks into the Red Sea.

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Low Storage Levels Exacerbate Concerns

Europe's vulnerability to supply shocks is heightened by lower-than-average gas storage levels heading into the winter heating season. According to data from Gas Infrastructure Europe, the region's underground storage facilities are filled to approximately 67% of capacity, which trails the five-year seasonal average.

Replenishment efforts have been hampered by several factors, including high summer demand from heatwaves, ongoing maintenance on Norwegian pipelines, and market conditions that made near-term storage injections unprofitable. The resulting surge in energy prices was cited by the European Central Bank as a key factor in its decision on Thursday to raise its benchmark interest rate by 25 basis points to 2.50%, pointing to acute risks of cost-push inflation.