Despite the continued absence of an enduring settlement in the Middle East, or even of any restoration of maritime energy flows, gas and power prices found their lowest level since the first trading day after the conflict this week.
Gas for delivery during May 26, which had previously surged up to 180p/th immediately after the Iranian attacks on Ras Laffan LNG, struck a low of 95p/th on Friday 17th after Iranian Foreign Minister Abbas Araghchi announced on social media that the Strait of Hormuz would be fully re-opened. The weekend of 18th & 19th April saw chaos in the Strait, with ship tracking data indicating 35 outbound vessels reversed course having initially made the attempt to cross. Even the 27 successful outbound crossings on 18th April represented a fraction of normal traffic through the Strait of Hormuz, which is now once again effectively closed to traffic. The following Monday however, prices did not even regain the value lost following Friday’s announced re-opening.
Midnight GMT on Tuesday 21st April brought the expiry of the ceasefire between the US and Iran. However, a few hours before the deadline for expiry, US President Donald Trump unilaterally announced an open-ended extension, stating he had agreed to a request from Pakistani mediators and would “hold our Attack on the Country of Iran until such time as their leaders and representatives can come up with a unified proposal.” Despite this, Trump also said the US Navy’s blockade of Iranian trade would continue. In apparent response to the continued US blockade, on the afternoon of Wednesday 22nd April, the Iranian Navy seized two vessels in the Strait. From a gas & power perspective, 15 LNG tankers remain trapped within the Persian Gulf, with no clear timeline for their exit.
At time of writing, UK gas and power prices remain only slightly above the lowest level seen since the immediate outbreak of the war, and investment funds trimmed their long positions on Dutch gas from 407TWh to 398TWh between week ending 10th April and 17th April. EU gas storage fullness sits at 30%, with disruption to global LNG supply during the peak of the summer refilling season growing more likely for as long as the Strait remains blocked.
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