European natural gas futures dropped on Tuesday, after touching their highest levels since January 2023, as fresh US economic measures against Iran intensified concerns regarding supply disruptions in the Persian Gulf.
Front-month Dutch TTF futures dropped 1.16% to 67.525 euros ($78.77) per megawatt-hour, while UK NBP futures dropped 1.28% to 167.000 British pence ($2.28) per therm.
On Monday, US Treasury Secretary Scott Bessent unveiled the government's plan to isolate Iran's economy by threatening secondary sanctions against the "enablers" who were helping keep Tehran's economy afloat.
"We are launching an economic onslaught against Iran's financial connections around the globe," while dubbing the new sanctions scheme "Operation Economic Outcast."
Meanwhile, Pakistan's Interior Minister, Mohsin Naqvi, has said that progress was made during talks with Iran's President Masoud Pezeshkian to restore the previous memorandum of understanding between Washington and Tehran, according to a report by Al Jazeera.
Traffic along the strategically crucial Strait of Hormuz, which accounted for one-fifth of global LNG flows, stood at 17 on Monday, according to data from ShipFinder.
Daniel Hynes, a senior commodity strategist at ANZ, noted that storage buffers would play a limited role this winter, amid historically low inventories. Germany, he said, was in a particularly acute situation, with inventories at just 51% of capacity, "a record seasonal low."
European gas inventories stood at 62.99% of capacity, compared ot 75.67% 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 80.2%, according to the Swiss Federal Office of Energy.