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EMEA Natural Gas Update: Prices Slide as US-Iran Uncertainty Persists

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European natural gas futures fell sharply on Tuesday as markets weighed uncertainty over the US-Iran conflict and the threat to energy flows through the Strait of Hormuz, even as a White House official said no negotiations with Tehran were underway.

Front-month Dutch TTF futures dropped 4.08% to 65.530 euros ($76.48) per megawatt-hour, while UK NBP futures dropped 4.23% to 161.080 British pence ($2.20) per therm.

A White House official reportedly said Tuesday that there were no ongoing negotiations with Iran, fueling uncertainty about the prospects for diplomatic progress between the two countries.

The US naval blockade against Iranian ports and ships is "firmly in place," while the Strait of Hormuz remains open to shipping, the official reportedly said.

The remarks follow a meeting between Pakistan's Interior Minister Mohsin Naqvi and the acting US ambassador to Pakistan in Islamabad on Tuesday, after Naqvi returned from Iran. Naqvi said they were hopeful of further progress and lasting peace in the region.

US Treasury Secretary Scott Bessent on Monday unveiled the government's plan to isolate Iran's economy by threatening secondary sanctions against "enablers" helping keep Tehran's economy afloat.

"We are launching an economic onslaught against Iran's financial connections around the globe," he said, while dubbing the new sanctions scheme "Operation Economic Outcast."

However, most of the measures announced merely reinforced existing restrictions against Tehran, which may have contributed to the pullback in natural gas futures, according to Investing.com.

Traffic along the strategically crucial Strait of Hormuz, which accounts 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, down from 75.67% in the same period a year ago, according to Gas Infrastructure Europe.

Inventories were also significantly below the five-year average for this period. The five-year average stood at 80.2%, according to the Swiss Federal Office of Energy.

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