The situation between the US and Iran has escalated once again, intensifying the uncertainty of natural gas supply in the Middle East. European gas prices have been hovering near highs for a month.

After a new round of hostile actions between the United States and Iran, traders are reassessing the natural gas supply situation in the Middle East. Following two consecutive trading days of gains, the European benchmark Dutch TTF natural gas futures price fell slightly on Thursday, to 48.725 euros per megawatt-hour. Nevertheless, due to uncertainty in the market about the outlook for the recovery of liquefied natural gas (LNG) supply in the Middle East, European natural gas prices are still hovering near their highs of about a month. On the evening of July 8th local time, the US military launched a second day of attacks on Iran, hitting infrastructure such as bridges, airports, and ports in Iran. Subsequently, Iran retaliated against US military targets in Kuwait. Meanwhile, reports indicate that passage of oil tankers through the Strait of Hormuz has "basically stopped" amid uncertainty about the prospects of a 60-day ceasefire agreement between the United States and Iran. Jorge Leon, director of geopolitical analysis at energy research firm Rystad Energy, stated in a report on July 8th that the passage situation on that day "appears to be completely stalled." He said that this indicates that the market's perception of risk can better reflect the situation than any statements from Washington or Tehran. The war between the United States and Iran, which began more than four months ago, has led to a suppression of about a fifth of the global trade in liquefied natural gas. For Europe, a tightening supply means having to compete more fiercely with other buyers around the world for sources of liquefied natural gas in preparation for stocking up on gas for next winter and coping with high temperatures. Currently, natural gas storage in Europe is much lower than historical levels for the same period. Natural gas storage facilities across the European Union are currently only about 51% full, compared to a historical average of around 65%; and Germany's natural gas storage level is only slightly higher at just above 43%. The filling rate of natural gas storage facilities in Europe is currently just over 50%. Recently, two empty liquefied natural gas tankers entered the Arabian Gulf and are heading towards the eastern entrance of the Strait of Hormuz, which may indicate their plans to enter the Persian Gulf to load liquefied natural gas cargo. However, with the US military launching airstrikes on Iranian targets for a second consecutive day, there is still a great deal of uncertainty about how quickly natural gas supplies in the Middle East can recover. The market's persistent risk sentiment is also reflected in the options market. An increasing number of traders are hedging against the risk of a sharp increase in winter natural gas prices through options. The implied volatility, which measures the cost of option contracts, has continued to rise this week and has reached its highest level in a month.