Europe Sees Gas Prices Plummet Amid Iran Proposal and Weaker Demand

European natural gas prices plummeted to their lowest point in three weeks, reaching €69.15 per megawatt-hour on Tuesday. The price drop of 5.6% from Monday's close was largely attributed to reports that Iran could reopen the Strait of Hormuz if the US lifts its blockade of Iranian ports.

According to Japan's Kyodo News Agency, Iran conveyed this proposal to Washington through mediators, including a plan to resume negotiations and achieve a lasting ceasefire between the two countries. An unnamed Iranian government official confirmed this development, stating that the proposal was indeed conveyed to the US.

In addition to the Strait of Hormuz reports, weak LNG demand in Asia, particularly in China and Japan, also contributed to the downward pressure on prices. Furthermore, natural gas storage facilities in European Union countries were found to be 69.94% full, well below last year's 81.85%. Norway's natural gas exports remain constrained due to maintenance work, which is expected to reduce capacity by around 20% through the end of September.

Analysts predict that warmer weather across Europe over the next two weeks will further reduce demand for natural gas for heating, supporting the decline in prices.