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EMEA Natural Gas Update: Futures Slide After Iran, Oman Reach Agreement Over Strait of Hormuz

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European natural gas futures slid on Wednesday after Iran and Oman reached an agreement on control of the Strait of Hormuz.

Front-month Dutch TTF futures dropped 2.73% to 64.770 euros ($75.49) per megawatt-hour, while UK NBP futures dropped 2.79% to 158.560 British pence ($2.16) per therm.

On Wednesday, Iran's Deputy Foreign Minister, Kazem Gharibabadi, said that Tehran and Muscat had agreed to a new temporary route for vessels navigating the Strait of Hormuz, which he said would be seven miles wide, according to a report by Al Jazeera.

According to Hossein Mohebbi, Iran's Revolutionary Guard Corps spokesperson, the two countries have also reached an agreement on their respective shares in managing and sharing revenues from the Strait, a Bloomberg report cited Iran's state-run Sepah News agency.

"Agreements have been reached on the share of each country in the waters of the strait and the share of Iran and Oman in its revenues," Mohebbi said.

On Tuesday, in a post on X, Oman's Foreign Minister, Badr bin Hamad Al Busaidi said that the two countries would soon announce the "temporary corridor," helping restore safe navigation through the strait, while a more "permanent solution will follow in due course."

However, Iranian officials have maintained that the strait will not fully reopen unless Washington meets Tehran's demands, including lifting the naval blockade, removing energy sanctions on the country and unfreezing its assets held abroad, according to an Al Jazeera report.

Meanwhile, traffic along the strategically crucial Strait of Hormuz, which accounted for one-fifth of global LNG flows, held steady, with 16 vessels transiting on Tuesday, according to ShipFinder.

ANZ senior commodity strategist Daniel Hynes noted that, at the current pace of injections, European gas storage facilities could enter winter at just 75% of capacity, as the region faced growing competition from Asian buyers for limited supplies, amid persistent disruptions to Middle Eastern flows.

European gas inventories stood at 63.28% of capacity, down from 75.99% in the same period a year ago, according to Gas Infrastructure Europe.

Inventories were also significantly below the five-year average for the period, at 80.5%, according to the Swiss Federal Office of Energy.

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