EU gas price falls sharply on hopes of Hormuz Strait reopening

The wholesale price of natural gas for the European market was down by more than six percent this morning, falling below 69 euros (around CZK 1,680) per megawatt-hour (MWh). It thus reached its lowest level since 31 August. The market is reacting to reports that Iran could quickly reopen the Strait of Hormuz in exchange for reduced military pressure from the United States, Reuters reported. However, the decline later eased.

Shortly before 14:00 CEST, the October delivery futures contract at the Title Transfer Facility (TTF) virtual trading hub in the Netherlands was down 3.5 percent at 70.67 euros per MWh. Since the start of the week, gas prices have fallen by around 12 percent.

The market slump was triggered by comments from an Iranian official, who said that Iran could reopen the Strait of Hormuz within seven days if the United States eases military pressure and lifts the blockade of Iranian ports, according to a trader who spoke to Reuters. Prices had already fallen on Monday on hopes of renewed diplomatic efforts to ease tensions in the Middle East.

According to data from Gas Infrastructure Europe (GIE), European gas storage facilities are currently almost 70 percent full. However, their fill level is nearly 12 percentage points lower year on year.