UK gas prices have traded near recent highs this week, as hopes of a negotiated reopening of the Strait of Hormuz faded and the conflict settled into a longer war of attrition.
Gas saw losses on Thursday 13th, with front month, quarter and season shedding 2-3%, and the front month contract on Europe’s main gas benchmark, the TTF, slipping below the psychologically significant €60/MWh mark; this proved to be the low. By Monday 17th the curve was testing three-week highs above 150p/th, and by Tuesday the front month was testing the peak set on 23rd and 24th July, with Winter 26 at its highest since the immediate aftermath of Iran’s attacks on Ras Laffan. Brent climbed from $88/bbl to a three-week high of $91/bbl. Wednesday brought a pause, with front month gas down 0.6% and day-ahead power off 2% on improved wind. Day-ahead had swung sharply earlier in the week, near a six-week high as the UK heatwave peaked on the 13th before falling 16% the following day.
On 17th August, the 60-day window opened by the memorandum of understanding signed by the US and Iran passed without a fresh settlement. Tehran has demanded that frozen Iranian assets released before shipping resumes, while Washington wants the strait to be reopened first. Transits remain a fraction of pre-war normal, with eight inbound and five outbound on the latest count, against 130-140 per day before the war. There have been no new LNG crossings since the Al Areesh at the end of July.
On Tuesday 18th, the UKMTO reported a vessel struck by an unknown projectile on an outbound transit, causing engine room damage and a crew casualty. The UAE accused Iran of a third attack on shipping in under a week, then imposed an indefinite embargo on all trade and financial transactions with Iran after two ballistic missiles were fired toward its territory. Tehran called the accusation “baseless” and a “false flag operation”. Yemen’s Houthis targeted Saudi Aramco’s Jizan refinery with two drones. A senior Iranian official told Reuters the country would move to a “fully offensive” posture, while President Trump, in a telephone call with Fox News, used an expletive while threatening to bomb Oman, the US ally mediating on shipping, “if Oman gets in the way.”
In domestic politics, Mr Trump’s approval rating has fallen to 33%, the lowest of his second term, with US average gasoline at $4.06/gallon on AAA data – 30% up year-on-year and 35% above pre-war levels – and midterms less than 80 days away. Vice President JD Vance was explicit, telling Fox News that keeping “oil and gas cheap for Americans” is “goal number one” in the war, ahead of preventing Iran obtaining a nuclear weapon. This contrasted with Mr Trump’s subsequent claim that “number one Goal is, and always will be” that Iran can’t have a nuclear weapon.
European storage crossed 60% mid-week to reach 61.37%, some 17% below the long-term average and marginally below the 2021 record low, putting the continent on course to enter winter near 68% against a 90% historical average. QatarEnergy extended its force majeure on Indian LNG deliveries to 31st August – six months of curtailment – though European LNG send-out rose 8% week-on-week as cargoes tilted back from Asia. French nuclear availability fell to a three-year low, with 26% of capacity offline amid heat-related outages.
The TTF is now traded by more investment funds than at any point in its history, participation rising from around 150 at the start of 2023 to a record 519. With storage entering winter well below normal and Hormuz still shut, that depth of speculative money is likely to amplify moves in both directions over the months ahead.
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