EU Natural Gas Falls Further Toward 20-Month Low

European natural gas prices fell 3% to around €40.6 per MWh, the lowest since April 20, as an interim US–Iran agreement is now in effect after both sides signed the memorandum remotely. Pakistan's prime minister said the signing means Iran will “instantly reopen” the Strait of Hormuz and the US will “immediately lift” its naval blockade on all Iranian ports. The deal also includes the permanent end to hostilities and initiates a 60-day negotiating period to reach a final agreement on the future of Iran's nuclear program, although Trump warned he would restart the war if Tehran fails to comply with the terms of the 14-point memorandum of understanding. In anticipation of the strait's imminent reopening, a handful of vessels have started returning to the Middle East, including tankers from Qatar, the world's second-largest LNG exporter.

European natural gas prices extended their decline to below €42 per MWh as markets awaited further details on a US-Iran deal that could lead to the reopening of the Strait of Hormuz. The interim accord is set to be signed in Switzerland on June 19, though the memorandum of understanding has not yet been released. President Donald Trump reiterated on Monday that the strategic waterway would be fully accessible by Friday and operate "toll-free." The prospect of restored maritime traffic through the strait has significantly eased concerns about prolonged disruptions to oil and gas flows from the Persian Gulf. However, uncertainty remains over how quickly regional production can recover, particularly after extensive damage to Qatar's Ras Laffan complex, the world's largest LNG export facility. Meanwhile, forecasts of hot weather across Europe next week are expected to boost gas consumption.

European natural gas prices dropped more than 9% to around €42.3/MWh on Monday, the lowest level since April, after the US and Iran agreed on a preliminary framework to end their conflict. Pakistan’s Prime Minister announced the breakthrough, confirming both sides have declared the immediate and permanent termination of military operations on all fronts, including in Lebanon. The agreement is set to be formally signed in Switzerland on June 19 and includes the lifting of the US naval blockade on Iranian ports as well as the reopening of the Strait of Hormuz, a critical shipping route through which roughly one-fifth of global LNG supplies transit. The reopening of the strait would restore LNG shipments from the Persian Gulf, helping to alleviate supply concerns that have kept gas prices in Europe and Asia elevated since March.