The price of gas in Europe is rising as geopolitical tensions fuel concerns about supply disruption

Dutch and British wholesale prices for gas rose on Monday as markets prepared themselves for Iran's reaction to the U.S. strike on its nuclear sites. They also raised concerns about supply disruptions, higher insurance costs and possible supply disruptions if Tehran closes the Strait of Hormuz.

LSEG data shows that the benchmark Dutch front-month contract for the TTF hub increased by 0.95 euros to 41.60 Euro per megawatt hour or MWh, or $14.01/mmBtu at 0803 GMT.

The contract rose briefly to 41.85 Euros/MWh intraday on Thursday, its highest level in since April 2.

The British front-month contract increased by 2.39 pence, to 98.55 p/therm. On Thursday, it also reached its highest level since April 2, at 98.66 pence per therm.

Iran's Parliament has reportedly approved the closing of the Strait of Hormuz through which 20% of global oil demand and gas flows. However, the Supreme National Security Council will make the final decision.

Daniel Hyenas is a senior commodity strategist for AN. He said that more than 20% of world LNG trade, namely Qatar's exports, would be in danger. This comes at a time when European buyers are rushing to replenish their depleted stocks ahead of the next heating seasons.

While Iran may threaten to completely close the Strait, the U.S. presence in the area could make it difficult for Iran to achieve this goal. This will increase the risk for any vessel that passes through the Strait. Players will have to factor in the increased risk and higher insurance costs.

The news sent Asian spot LNG prices up to their highest level in four months and oil prices rose to their highest levels since January.

Engine's Energy analysts said that the blockage could be detrimental to Iran's relationship to its main oil client, China. It could also give the U.S., who want lower oil prices and less inflation, more reasons to wage war.

According to LSEG analyst Ole Skrynyk, the market fundamentals are that demand in Northwest Europe will continue to decrease due to warmer temperatures. However, a significant rise in Norwegian exports is expected to support storage injections.

The benchmark contract on the European carbon markets was nearly flat at 73.01 Euros per metric ton.

(source: Reuters)