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EMEA Natural Gas Update: Futures Rally Over 5% Amid Lingering Strait of Hormuz Uncertainties

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European natural gas futures rallied on Monday as uncertainties continued to linger over the restoration of normal shipping traffic along the Strait of Hormuz.

Front-month Dutch TTF contracts rose 4.67% to 58.140 euros ($67.22) per megawatt hour, while UK NBP futures rallied 5.05% to 142.820 British pence ($1.93) per therm.

US President Donald Trump is reportedly prepared to drop his push for a formal nuclear agreement with Iran if the country agrees to fully reopen the Strait of Hormuz, according to a report by the Wall Street Journal on Sunday, citing unnamed US officials.

Trump also said that his administration was only "semi-negotiating" with Iran, while noting that the country was reeling from massive inflation due to the ongoing US blockade, during a phone interview with Axios on Sunday, which signaled that Washington was not holding serious talks with Tehran.

"It will work out. It always works out. It's like a chess game," he said, referring to the back-and-forth negotiations with Tehran over the past several months.

Meanwhile, Iranian Foreign Minister Seyyed Abbas Araqchi noted that the country's deal with Oman regarding the Strait was in its "final stages," but reiterated that the reopening of the strategic waterway was contingent on several other conditions, particularly addressing violations made by the US, according to the Mehr News Agency.

Traffic along the strategically crucial Strait, which accounted for one-fifth of global LNG flows, held steady, with 12 transits on Sunday, according to data from ShipFinder.

Daniel Hynes, a senior commodity strategist at ANZ, highlighted that European gas inventories were significantly below the average for this period, while noting that even if the Strait were to fully reopen, it would "require a sustained period of calm" for shipping companies to begin making regular transits through it.

Gas inventories remained low at 58.84% of capacity, compared to 71.25% during the corresponding period a year ago, according to data from Gas Infrastructure Europe.

Inventories were also significantly below the five-year average for this period, at 75.6%, according to the Swiss Federal Office of Energy.

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