European Natural Gas Prices Pause Rally Amid Middle East Conflict Fears

European natural gas prices paused their rally on Friday but still managed to log its fifth consecutive weekly gain, driven by concerns over global supply security due to expanding Middle East military conflict.

The benchmark Dutch front-month contract eased 2.5% to trade around 77.60 euros per megawatt-hour (MWh) after a five-day winning streak that propelled the contract to 79.64 euros - its highest level since 2023.

Despite the pull-back, wholesale gas curves remain anchored by a steep geopolitical risk premium driven by widening kinetic operations across key Middle Eastern maritime corridors.

The Strait of Hormuz chokepoint and Houthi expansion fuel supply fears as military engagements between U.S. forces and Iran have severely restricted tanker traffic through the Strait, handling roughly 20% of global liquefied natural gas (LNG) flows.