-- European natural gas futures witnessed a steep decline on Wednesday, after Iran agreed to a two-week ceasefire and to allow vessels safe passage through the Strait of Hormuz.
The front-month Dutch TTF contract dropped 18.59% to 43.35 euros ($50.76) per megawatt-hour, while UK NBP futures were down 19.24% to 109.03 British pence ($1.40) per therm.
In a Truth Social post on Tuesday, US President Donald Trump shared a statement from Iran's Foreign Minister Seyyed Abbas Araghchi, who said Tehran would ensure safe passage through the Strait, subject to "coordination" with the country's armed forces, within technical limitations, if attacks against it halted.
Trump called off strikes against Tehran for a period of two weeks, during which both sides are set to meet and sign a finalized agreement.
In a subsequent post, Trump also said that the US will be helping deal with the traffic build-up in the Strait of Hormuz, which had been brought to a standstill for over a month, amid the ongoing conflict.
Currently, the Strait continues to remain effectively closed, with just 11 vessels passing through it over the past 24 hours, according to the Hormuz Strait Monitor.
That is still far from the typical pre-war daily traffic of 138 vessels per day, according to the UK's Joint Maritime Information Center.
Daniel Hynes, a senior commodity strategist at ANZ, said that even if shipping routes reopen, the "missing Qatari output cannot be replaced quickly," which he said will lead to inventory drawdowns and demand rationing. He said he foresees "limited downside" for LNG prices.
His concerns were echoed by Cyril Widdershoven, a geopolitical strategist, who noted that the Strait was not yet open, and if anything, it was now being "conditionally managed," with Tehran now retaining significant leverage over global energy flows.
He concluded by saying that the ceasefire announced on Tuesday was not a de-escalation, but rather a shift towards "controlled instability," which he said would have profound implications on maritime trade, energy security, and geopolitics going forward.
Meanwhile, Europe has just begun net injections into its storage inventories, which are currently depleted at just 28.61% of capacity, compared to 35.01% during the same period last year.
JP Morgan analysts noted that Northwest Europe exited winter with its lowest gas inventories since 2011, at 17.6% of storage capacity.
Analysts expect the bloc will need to add 31 billion cubic meters of gas into storage between April and October to meet the European Union's 80% storage requirement before next winter.