European natural gas prices kept rising on April 16 after top Israeli military officials reasserted that their country has no choice but to respond to Iran’s weekend drone and missile attack.

Benchmark futures rose as much as 3.4% in early trading, nearing the highest levels since January. The contracts have gained about 18% since April 11, when markets started to price in greater geopolitical risks, including potential disruptions from Russian strikes on Ukrainian energy infrastructure.

European and US officials have boosted their calls for Israel to avoid a tit-for-tat escalation that could provoke a wider war. A broader conflict in the region risks pushing up global energy prices at a time when central banks are still trying to rein in inflation.

While Europe has ended an exceptionally mild winter with strong gas inventories, traders are on constant alert for signs of supply disruptions. The region doesn’t currently source much gas from the Middle East, but its reliance on global markets has surged since it lost most pipeline flows from Russia in 2022.

Meanwhile, deliveries from top supplier Norway remain depressed following unplanned maintenance at some of the country’s facilities that started over the weekend. The bulk of the works are now expected to last until at least April 17, according to the network operator Gassco AS.

Dutch front-month futures, Europe’s gas benchmark, rose 2.7% to €31.98 a megawatt-hour at 9.05am in Amsterdam.

Volatility has also perked up, with investors seeking protection amid concern that the conflict in the Middle East could widen. A measure of the cost of options contracts linked to benchmark Dutch gas has ticked higher over the last 10 days.

  - Bloomberg