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EMEA Natural Gas Update: Futures Slide After Bessent Signals Potential Deal on Hormuz Strait

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European natural gas futures erased gains from earlier in the session after US Treasury Secretary Scott Bessent signaled a major potential de-escalation between the US and Iran, regarding the Strait of Hormuz.

The front-month Dutch TTF contract was down 2.18% to 56.250 euros ($64.81) per megawatt-hour, while the front-month UK NBP contract was down 2.73% to 137.170 British pence ($1.84) per therm.

Bessent told CNBC's Squawk Box on Tuesday that the two sides may reach a deal to reopen the Strait of Hormuz as soon as Wednesday, in what would be a major de-escalation in the conflict that has raged on and off since late February.

Traffic through the strait, which accounted for one-fifth of global LNG flows before the war, held steady with 19 transits on Monday, according to ShipFinder.

However, analysts such as David Hynes, a senior commodity strategist at ANZ, noted that markets remain on edge following the attack on an LNG tanker over the weekend, while it was attempting to transit the Strait.

This comes at a time when Europe struggles with low gas inventory levels, at 57.43%, compared to 69.24% during the corresponding period a year ago, according to Gas Infrastructure Europe.

Inventories were also significantly below the five-year average for this period, at 73.5%, according to the Swiss Federal Office of Energy.

At the same time, parts of Central Europe and the Balkan Peninsula are facing a fast-expanding heat dome, pushing temperatures above 40 degrees Celsius, according to Severe-Weather EU, raising gas use through increased power demand.

To make matters worse, European countries are also dealing with lower nuclear energy output, as rivers dry up.

Earlier this week, Hungary's Prime Minister Peter Magyar announced that the country's Paks nuclear power plant would be shutting down as the Danube river level became critically low due to the heatwave, as reported by.

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