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EMEA Natural Gas Update: Prices Drop on Bessent's Hormuz Comments

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European natural gas futures extended losses in line with crude in after-hours trade on Tuesday, after US Treasury Secretary Scott Bessent signaled a potential breakthrough in negotiations with Iran that could ease concerns over shipping through the Strait of Hormuz.

The front-month Dutch TTF contract fell 5.008% to 54.625 euros ($62.91) per megawatt-hour, while the front-month UK NBP contract declined 5.432% to 133.360 British pence ($1.79) per therm.

Energy prices weakened after Bessent told CNBC that the US and Iran could reach an agreement to reopen the Strait of Hormuz as early as Tuesday or Wednesday. Bessent said such a deal would allow commercial vessels to transit the strategic waterway freely.

His comments followed US President Donald Trump's decision over the weekend to call off a major attack on Iran to allow negotiations to proceed.

Trading Economics noted that European natural gas prices have eased more than 9% below the three-and-a-half-year high of 63.7 euros/MWh reached on July 24. However, prices remain around 70% higher than at the same time last year.

Despite Tuesday's decline, forecasts for sustained record-breaking heat continued to provide support for cooling demand. Severe Weather Europe said Tuesday that a powerful heatwave remains entrenched over Central and Eastern Europe, with temperatures expected to exceed 40 degrees Celsius and challenge historical records.

Power systems across the region are also facing mounting heat-related pressure. Montel reported that Hungary, Poland, Moldova and Romania have all taken measures that include electricity rationing this week to safeguard electricity as persistent drought and extreme heat strain power grids. Atmospheric G2 said Monday that it sees some relief from the heat starting in the second half of August.

However, Tuesday's losses were limited by ongoing supply concerns and below-average storage levels. ChemNet reported that Norwegian state-owned gas transportation operator Gassco announced planned maintenance at the Gullfaks oil and gas field in the North Sea from Aug. 4-10. During the maintenance period, daily natural gas deliveries from the field will be reduced by 6.5 million cubic meters.

European gas inventories remain well below year-ago levels. Gas Infrastructure Europe said storage facilities were 57.43% full, compared with 69.24% during the same period last year. Inventories also remained significantly below the five-year average of 73.5% for this time of year, according to the Swiss Federal Office of Energy.

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