European benchmark gas prices plummet on Middle East ceasefire agreement
The European benchmark 'gas contract' plunged on the morning of Wednesday after U.S. president Donald Trump agreed to a two-week ceasefire. This raised hopes of a return of oil and LNG through the Strait of Hormuz.
Trump said that the last-minute agreement was contingent on Iran agreeing to stop its blockade against oil and gas through the Strait.
ICE data shows that the?Dutch Gas contract for May dropped about 17%, to 43.95 Euros per?megawatt-hour at 0645 GMT. This is its lowest level since March 2.
The United States and Israel have attacked Iran at the end February. A fifth of the world’s LNG travels through this strait between Oman, and Iran. However, shipping has almost come to a standstill.
The result was that the European benchmark price for gas spiked. It reached a high intra-day of about 74 euro/MWh at mid-March. This is its highest level since January 2023.
Analysts said that it was unlikely that all LNG and oil tankers will be able pass through the Strait of Hormuz in the next two week and the return of normal flows would depend on the extension of the ceasefire.
The Iranian attacks on QatarEnergy last month also caused significant damage to its LNG facilities.
"This won't be solved by a ceasefire." "This will not be resolved by a ceasefire agreement," Arne Lohmann-Rasmussen, Global Risk Management's chief analyst, said.
(source: Reuters)
