Oil & Energy
EMEA Natural Gas Update: Futures Slide After More Clarity on US-Iran Memorandum
European natural gas futures were down on Wednesday, after the draft memorandum between the US and Iran was unveiled, offering much-needed clarity on Middle Eastern energy flows through the Strait of Hormuz.The Dutch TTF front-month contract fell 1.18% to 41.275 euros ($47.93) per megawatt-hour, while the UK NBP front-month contract dropped 1.16% to 98.250 British pence ($1.32) per therm.The text of the memorandum, which is scheduled to be signed by the United States and Iran in Switzerland on Friday, was reviewed by Bloomberg News.Among a series of provisions aimed at ending hostilities in the region, the agreement stipulates that Iran will immediately take measures to ensure the safe and uninterrupted passage of commercial vessels through the Strait of Hormuz within the next 30 days.It also said that immediately after the signing of the MOU, the US will lift its "naval blockade and prevent any interference or obstruction against the Islamic Republic of Iran."The development represents a major step toward stabilizing global energy markets, with fears of sustained supply shortages and shipping disruptions beginning to recede.At the same time, Qatar, the region's largest producer, said it expects to rapidly restore output once safe passage through the Strait of Hormuz resumes, with production capacity projected to recover to 50% within a month and 80% within two months, according to a Bloomberg report, citing sources familiar with the matter.The strategically crucial Strait of Hormuz, which accounted for one-fifth of global LNG flows, continued to remain effectively shut for the 16th week running, with no vessels transiting over the past 24 hours, according to the Hormuz Strait Monitor.This comes at a critical juncture for Europe, with natural gas inventories at just 45.03% of capacity, compared to 53.78% during the corresponding period a year ago, according to Gas Infrastructure Europe.Inventories were also significantly below the five-year average for this period, at 59.3%, according to the Swiss Federal Office of Energy.