Dutch and British gas prices rose on Monday after US-Iran talks over the weekend failed to reach a deal to end the war, jeopardising a fragile two-week ceasefire, and as the US military said it will begin a blockade of all maritime traffic entering and exiting Iranian ports and coastal areas on Monday.
The benchmark Dutch front-month contract at the TTF hub was up 8.8 per cent at €47.50 per megawatt hour (MWh) by 07:54 GMT, data from the Intercontinental Exchange (ICE) showed.
The British contract for April was up 9.2 per cent at 119.83p per therm.
The US Central Command said that the US blockade, starting at 10:00 ET on Monday (14:00 GMT), would be "enforced impartially against vessels of all nations entering or departing Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and Gulf of Oman."
"The market is now largely back to conditions before the ceasefire. The key remaining question is if the US renews strikes on Iran, raising the risk of strikes on energy infrastructure across the region which could have a further lasting impact beyond the duration of the war," said Saul Kavonic, head of energy research at MST Marquee.
European gas prices will rise on the geopolitical developments. Gains will probably be bigger than for oil, given the higher volatility over recent weeks in reaction to such news updates, said LSEG analyst Ulrich Weber.
Domestically, we anticipate little cause for repricing as weather forecasts show diverging patterns, he said. Rising temperatures in the coming days are somewhat offset by lower wind power generation. The impact of maintenance remains quite small and the balance will allow for increasing injections of gas into storage day by day, Weber said.
An extended period of tighter global liquefied natural gas (LNG) availability could constrain Europe's ability to refill storages this summer.
The European Network of Transmission System Operators for Gas (Entsog) and the European Commission have urged market participants to start filling storages as early as possible to offset lower-than-expected LNG supply this summer.
EU gas storage sites were last 29.3 per cent full, compared with around 35 per cent at the same time last year, Gas Infrastructure Europe data showed.
(Reporting by Marwa Rashad; editing by Susan Fenton)