Benchmark European and British wholesale gas prices rose on Wednesday morning after reports of Iran laying mines in the Strait of Hormuz raised concerns over liquefied natural gas supply.
It also signalled that the Middle East conflict would last longer than expected.
The Dutch front-month contract at the TTF hub, the benchmark price for Europe, rose 5.7 per cent to €50.09 per megawatt hour by 09:18 GMT, ICE data showed.
The British April contract rose 6.03 per cent to 127.90p per therm, ICE data showed.
"The news of Iranians beginning to mine the Strait of Hormuz would set further barriers to resumption of shipping," said LSEG analyst Ulrich Weber. The US military eliminated 16 Iranian mine-laying vessels near the strait on Tuesday, the US Central Command said in a statement.
President Donald Trump warned that any mines laid in the Strait by Iran must be removed immediately. Goldman Sachs analysts said uncertainty around supply shock duration can matter significantly for gas prices.
"Specifically, a scenario where the market fears that this large supply shock might linger for months creates a sense of urgency to offset the resulting tightening in global gas balances. This is especially the case given that the gas market typically looks to have comfortable inventory levels ahead of the winter," they said in a research note.
Tenders for LNG for delivery in March have remained unawarded, indicating a shortage of immediately available fuel.
This is raising concerns in Southeast Asia, where hotter weather in the months ahead is expected to raise power demand.
The region will also need to compete with European buyers looking to refill storage for their heating season, said Daniel Hynes, senior commodity strategist at ANZ. Across Northwest Europe, average temperatures are now expected to start falling, with the day ahead being 0.8 degrees Celsius lower, and expected to hit a minimum on Sunday, LSEG data showed.
(Reporting by Marwa Rashad; Editing by Harikrishnan Nair)
