European Gas Rebounds on Middle East Uncertainty

European natural gas prices rose toward €74/MWh on Thursday, rebounding from a three-week low amid uncertainty over a diplomatic 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.

European natural gas prices fell toward €70 per megawatt-hour, their lowest level in three weeks, after reports that Iran could reopen the Strait of Hormuz if the US lifted its blockade of Iranian ports. Japan’s Kyodo News reported that Tehran had proposed reopening the waterway within seven days, potentially providing a basis for diplomatic discussions at the UN General Assembly. President Donald Trump is due to address the assembly and may meet Iranian President Masoud Pezeshkian. Rising numbers of LNG tankers and crude carriers using alternative routes have also eased supply concerns, while LNG demand in Northeast Asia remains weak, particularly in China, Japan and Turkey. In Europe, warmer and drier weather is expected over the next two weeks. Gas storage stood at 69.94% full, up 0.31 percentage points day on day but 11.76 points below last year. Meanwhile, Norwegian gas exports remained constrained by maintenance, with bookings falling to 262.5 million cubic metres per day.