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EMEA Natural Gas Update: Futures Slide on US-Iran Peace Agreement Amid Skepticism

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European natural gas futures fell sharply on Monday, reaching their lowest levels in five weeks after the US and Iran agreed on a draft agreement to end hostilities in the Middle East and reopen the Strait of Hormuz.

The Dutch TTF front-month contract dropped 7.20% to 43.405 euros ($50.42) per megawatt-hour, while the UK NBP front-month contract was down 7.58% to 103.430 British pence ($1.39) per therm.

In a Truth Social post on Sunday, US President Donald Trump said that the deal with Iran was "now complete," adding that the Strait of Hormuz would fully reopen, with no tolls being charged, and that the US naval blockade in the region would be lifted, paving the way for uninterrupted passage of commercial vessels through the strategically important waterway.

Trump said that oil will once again begin to flow once mine removal operations have concluded in the Strait.

In another post, regarding the timing of the reopening, Trump said, "With the opening of the Strait upon the signing of the Deal on Friday, for purposes of mine removal, oil will flow on both ends again for the Region, and the World!," suggesting mine removal may begin on Friday with shipping to resume later.

But later on Monday, he said in a Truth Social post that ships stuck inside the Strait of Hormuz were now "starting to move, many loaded up with oil, out of the Strait of Hormuz."

He did not provide more detail other than to say the ships had re going along the Southern "Highway," which is totally safe, secure, and pristine.

According to Daniel Hynes, a senior commodity strategist at ANZ, European gas futures continued to ease amid easing concerns regarding the refilling of storage facilities, with LNG supplies set to recover once the Strait opens.

However, according to Cyril Widdershoven, a senior advisor at Blue Water Strategy, energy flows through the Strait are likely to rebound quickly once the deal is finalized, though he cautioned that it could take "considerably longer" for volumes to return to pre-crisis levels.

He warned that the recovery is likely to be measured in months rather than weeks, as shipping activity will depend on a range of factors beyond the peace agreement itself, such as physical security verification and insurance reassessments, before leading to gradual restoration in commercial confidence.

Widdershoven thus expects the elevated risk perceptions to likely persist "well into 2027, or even longer," even if a lasting deal is signed this week.

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