UK Natural Gas Prices Drop

UK natural gas futures dropped more than 2% back below 100 pence per therm on Tuesday, reversing Monday’s gains amid prospects of continued US-Iran peace talks. Reports suggest Iran is set to participate in a second round of negotiations with the US in Islamabad after earlier expressing hesitation about taking part. Still, there remains uncertainty as President Trump indicated he is unlikely to extend the two-week ceasefire, which is set to expire on Wednesday, and reiterated that the Strait of Hormuz would remain closed until a deal is reached. The conflict has already disrupted around one-fifth of global LNG flows, although softer demand from Asia has helped reduce competition for cargoes. Also, National Gas recently indicated that domestic stocks should be sufficient to cover summer demand and could allow some exports to mainland Europe.

UK natural gas futures jumped over 5% back above 100 pence a therm on Monday, recovering part of Friday’s decline after the Strait of Hormuz was closed once again, reigniting concerns over disruptions to energy flows from the Persian Gulf. The renewed blockade followed Iran’s reversal of its earlier position, citing “repeated breaches of trust” by the US regarding the ceasefire. Tensions escalated further after the US intercepted and seized an Iranian-flagged vessel, prompting Tehran to launch drone strikes toward some US military vessel and warn that ships attempting to pass the waterway would be attacked. The conflict has already disrupted around one-fifth of global LNG flows, although softer demand from Asia has helped reduce competition for cargoes. Also, National Gas recently indicated that domestic stocks should be sufficient to cover summer demand and could allow some exports to mainland Europe.

UK natural gas futures dropped toward 97 pence a therm, the lowest since February 27, after Iran’s Foreign Minister Abbas Araghchi said the Strait of Hormuz is fully open to commercial shipping during the ceasefire. The move fueled optimism that one of the most severe global energy supply disruptions may be nearing an end. The announcement followed earlier comments from President Donald Trump, who said Iranian concessions could lead to a broader peace deal, while noting the US naval blockade targeting Iran would remain until negotiations are finalized. The conflict had disrupted around a fifth of global LNG flows, though weaker Asian demand has eased pressure on European buyers. In addition, National Gas, the country's gas system operator, stated that domestic gas inventories are expected to be sufficient to meet summer demand and could even allow some gas to be exported to mainland Europe.