TTF Prices Rise

European natural gas prices rose to €66 per megawatt-hour on Thursday after a two-day decline, as investors assessed diplomatic progress in the Middle East. Iran’s military said Tehran and Oman had reached agreements on the sharing of control and revenues from the Strait of Hormuz. However, Tehran stressed that the deal does not imply an immediate reopening of the waterway and warned that the strait will remain closed unless the US ends the war, raising uncertainty over when supply conditions will improve. Continued restrictions in the strait have disrupted LNG flows from the Persian Gulf, causing severe delays to shipments from major exporter Qatar. At the same time, extreme summer heat has boosted demand for gas-fired power generation, leaving European gas storage just 63% full, the lowest level for this time of year since 2009. As a result, prices are likely to remain volatile, particularly if supply disruptions persist into the heating season.

European natural gas prices dropped more than 2% to below €65 per megawatt-hour on Wednesday, extending losses from the previous session as signs of progress in Middle East negotiations eased concerns over further supply disruptions. Iran’s and Oman’s foreign ministers said that they discussed plans for a temporary transit corridor through the Strait of Hormuz, along with a project to clear mines from the waterway. Pakistan also reported significant progress in talks with Tehran aimed at ending the war. The US decision to return diplomats to the Middle East also allayed fears of a further escalation in the conflict. However, supply risks remain as the ongoing maritime blockade continues to disrupt physical LNG flows from the Persian Gulf, with shipments from major exporter Qatar facing severe delays. Persistent hot weather across Europe is also driving higher electricity demand for cooling, slowing the pace of seasonal gas storage injections.

European natural gas prices fell below €67 per megawatt-hour, easing from Monday’s 3½-year high of €68.46, as improving prospects for de-escalation between the US and Iran reduced some concerns over supply disruptions. Gas prices tracked a broader decline in energy markets after Washington’s latest measures against Tehran appeared less likely than expected to disrupt physical supplies. Diplomatic efforts also offered some relief, with Pakistan’s army chief visiting Iran and Qatar continuing to support mediation between Tehran and Washington. Reports that the US could begin returning evacuated diplomats to the Middle East also suggested that an immediate escalation in the conflict may be less likely. Nevertheless, supply risks remain, particularly as disruptions around the Strait of Hormuz have constrained LNG deliveries from Qatar. At the same time, persistent hot weather is boosting cooling demand, making it harder for European countries to rebuild gas inventories ahead of winter.