EU Natural Gas Falls Further Toward 20-Month Low

European natural gas prices dropped below €72 per megawatt-hour on Friday, paring back the previous session’s gains amid reports of US-Iran discussions over a phased agreement to reopen the Strait of Hormuz and end the US blockade. The strait remains a major sticking point in efforts to resolve the nearly seven-month conflict, with neither side willing to relinquish control of the key waterway. LNG flows from the Persian Gulf remain severely disrupted, intensifying competition between Europe and Asia for limited supplies just as the region races to rebuild inventories ahead of the winter heating season. European gas storage is currently just over 70% full, still below both the seasonal norm and the region’s target, leaving the market vulnerable to further supply disruptions. Maintenance in Norway is also curbing pipeline supplies to Europe, tightening the market further. European gas prices have declined more than 8% over the week.

European natural gas prices rose toward €75/MWh on Thursday, rebounding from a three-week low amid uncertainty over a resolution to the Middle East conflict that could reopen the Strait of Hormuz. Iranian President Masoud Pezeshkian said that Tehran would never surrender to the US but remained open to dialogue and diplomacy, while setting conditions for a return to negotiations. The key waterway remains largely closed, impeding LNG flows from the Persian Gulf. Europe’s gas storage position remains a key concern as the winter heating season approaches. Storage facilities are around 70% full, still below the five-year seasonal average and the region’s 80% target. Goldman Sachs reiterated upside risks to gas prices, warning that European benchmark could rise above €100/MWh in peak winter if Gulf LNG exports do not increase.

European natural gas prices fell to around €72/MWh on Wednesday, their lowest level since September 4th, as renewed US-Iran talks revived hopes for a diplomatic resolution. President Donald Trump said US officials had a very good meeting with Iranian representatives on the sidelines of the UN gathering, though no further details were provided. Tehran also reportedly signaled a willingness to reopen the Strait of Hormuz within seven days if Washington eases military pressure and lifts its blockade. Rising numbers of LNG tankers and crude carriers using alternative routes have also alleviated some supply concerns. However, uncertainty surrounding the conflict and the outlook for energy transportation remains. Europe’s gas storage facilities are around 69% full, well below the 85% five-year seasonal average, leaving the market vulnerable ahead of the winter heating season. Norwegian gas exports also remain constrained by maintenance, with bookings falling to 262.5 mcm/day on Tuesday.