The market reacted to the news about the complete opening of the Strait of Hormuz to commercial shipping, although both investors and analysts remained cautious.
The most liquid gas contract with the nearest delivery date, listed on the Dutch TTF hub, dropped during the day to EUR 38.27 per MWh on the ICE Endex exchange. This meant a decrease of almost 10%. compared to the previous settlement and the lowest price level since March 2.
Read also: Iran opens the Strait of Hormuz. Oil is the cheapest in many weeks
The move came after US President Donald Trump wrote on Truth Social that “the Strait of Hormuz is fully open and ready for business and full passage.”
Prices may go down further
In an interview with Montel News, Tom Marzec Manser, director of gas and LNG in the European region at Wood Mackenzie, stated that further price drops are possible. “As soon as we see movement of stranded LNG cargoes or hear official information from QatarEnergy regarding the reopening of the Ras Laffan port, there could be further downward pressure on the TTF market,” he said.
Fabio Reale, head of LNG analyzes at the Clarksons brokerage, also indicated in an interview with Montel News that there are signs that QatarEnergy has resumed operations at the end of last week. At the same time, he noted that the actual restoration of LNG exports may take several weeks and extend beyond the current truce.
“The most awaited news”
Alex Froley, LNG market analyst at ICIS, said that this information “sounds positive”, noting that the market has already reacted with a drop in prices below EUR 40 per MWh. — There are approximately 14 LNG cargoes loaded and ready to sail in the strait. For now, however, we don't see them actually setting off, he added.
In turn, Yahdian Falah, senior portfolio manager at trading firm Trianel, described reports of the opening of the strait as “the most anticipated news.” — Although this is a temporary solution, it further reduces the risk of escalationand – he emphasized. — Now the key issue will be when the first LNG ship will sail through the strait.
Earlier in the day, Montel News published the results of a study showing that the reference gas price in Europe could average around EUR 45 per MWh this year if the Strait of Hormuz reopens next month and LNG production in Qatar resumes in the summer.
Above EUR 40 per MWh
The consensus among gas market analysts so far assumed the opening of the route at the end of May. Such a scenario would mean an approximately three-month suspension of Qatari LNG exports since the start of the US-Israeli war with Iran on February 28, which led to the closure of the route responsible for approximately 20 percent. global LNG flows.
In this variant, the average contract price for the next month at the European TTF hub would remain slightly above EUR 40 per MWh until the end of the year, according to data from the consulting company Wood Mackenzie.
In the baseline scenario, analysts assume a full opening of the strait in the second half of next month and a gradual return of Qatar's LNG production capacity — excluding possibly damaged infrastructure — between then and the end of August. As Nacho Garcia-Lajara, senior gas and LNG analyst at Wood Mackenzie, explained in an interview with Montel News, such a course of events would be consistent with the market's cautious assessment.
Energy Aspects estimates the average gas price at €42 per MWh and ABN Amro at around €45. A more conservative forecast by SEB bank assumes an average price of EUR 55 per MWh, assuming full reopening of the route by the end of May and no further serious damage to the gas infrastructure.
