Gas prices plunge by more than 10%. Hopes for peace in Iran shake up the market

The wholesale price of gas for the European market is falling sharply today amid hopes for a peace deal between the United States and Iran. The key front-month gas futures contract at the Title Transfer Facility (TTF), a virtual trading hub in the Netherlands, was down by more than ten percent at around 13:45 CEST, trading close to 42 euros (roughly CZK 1,020) per megawatt-hour (MWh). Earlier, it had fallen as low as 40.50 euros per MWh.

According to XTB analyst Jiří Tyleček, the fall in gas prices is linked to hopes for a possible easing of the conflict in the Middle East. "I would be cautious about optimism for now, though, because several times in recent weeks it has looked as if the war was nearing an end, only for events to take another turn. Gas prices are indeed falling, but the decline is most pronounced in the nearest monthly contract. The picture is far less clear for longer-term contracts, indicating that the market is still pricing in some degree of risk," Tyleček said.

If the situation in the Middle East really does stabilise, there is room for prices to fall further, he said. "However, the decline may not be particularly dramatic. Deferred demand linked to summer storage refilling, as well as damage to some energy infrastructure in the Middle East, could limit any more significant price decreases," Tyleček warned. For Czech households, the decisive factor will be how prices develop over the summer. He also noted that further developments in the war in Ukraine will have an impact.

US President Donald Trump announced that the United States was briefly suspending an operation to escort and protect ships threatened by Iran's blockade in the Strait of Hormuz. He cited highly advanced talks with Iran and efforts to reach an agreement.

Shipping through the Strait of Hormuz has been brought to a standstill by the conflict in the Middle East, which began in late February with US-Israeli strikes on Iran. The strait is a key route for transporting oil and gas from the Persian Gulf region.

The White House believes that a deal on a one-page memorandum of understanding is within reach, Axios reported, with Tehran's response on several key points potentially arriving within 48 hours.

According to the outlet, the deal envisages, among other things, a moratorium on Iranian uranium enrichment, the lifting of US sanctions on Tehran and the release of frozen Iranian assets, as well as the resumption of shipping through the Strait of Hormuz.