European natural gas benchmarks moved higher on Monday as a fresh exchange of strikes between the United States and Iran weighed on sentiment and threatened to delay any imminent resolution to the conflict that has persisted for more than three months.
By 09:03 ET (13:03 GMT), the benchmark front-month Dutch contract at the TTF hub had climbed 2.7% to 47.220 euros per megawatt hour, according to ICE data. British natural gas futures also advanced, rising 3.5% to 114.63 pence per therm.
U.S. military officials said they bombarded radar and drone control sites in Iran after Tehran shot down an American drone over the weekend. Iran confirmed it launched an additional retaliatory strike and Kuwait reported intercepting drone and missile fire. These moves followed a pattern of reciprocal military actions that has periodically intensified energy market concerns.
Separately, Israeli forces have moved to extend control over a sector of neighboring Lebanon in response to drone launches by Iran-aligned Hezbollah militants. The series of regional escalations has combined to keep market participants on edge.
Diplomatic efforts have continued in parallel with the hostilities. U.S. President Donald Trump has said he believes Iran wants to reach an agreement, and negotiators remain engaged on outstanding sticking points, including Tehran's nuclear program. Mr. Trump is reviewing a proposed memorandum of understanding that is reported to include an extension of the current ceasefire, provisions for restarting shipping in the Strait of Hormuz, and a framework for discussing Iran's nuclear ambitions. Iran's chief negotiator said on Sunday that Tehran would not accept an agreement that does not secure its rights.
While talks continue without a firm resolution, the Strait of Hormuz has remained effectively closed to commercial shipping traffic. That blockage has supported a broader rise in energy prices since the conflict began and has prompted concerns about potential inflationary impacts for economies around the world.
For Europe specifically, the war has disrupted flows of key liquefied natural gas shipments to the region, leaving storage below last year's levels. Gas Infrastructure Europe data show EU gas storage sites were last 40.09% full, versus roughly 47.89% a year earlier. The tighter balances in storage have contributed to upward pressure on prices.
Brent crude futures, the global oil benchmark, were also trading higher on Monday as markets assessed the implications of renewed military activity and the potential for further disruption to maritime trade routes.
Market context
- Prices responded quickly to the latest military developments and to continued uncertainty over a diplomatic settlement.
- Supply-side constraints tied to reduced LNG flows and the effective closure of the Strait of Hormuz remain a focal point for European energy balances.
- Storage levels across the EU are lower than a year earlier, adding to the vulnerability of regional gas markets.