The US-Iran deal lowered gas prices in Europe

The European gas market experienced a significant downturn following the announcement of a U.S.-Iran agreement on ending hostilities in the Middle East and the subsequent declaration of opening the Strait of Hormuz after the signing of the document. This development had immediate effects on energy prices, particularly affecting natural gas markets across Europe. On Monday, the price of a megawatt-hour of gas with delivery scheduled for July stood at 43.55 euros on the reference Dutch digital exchange TTF, marking a decrease of 7.4 percent compared to the end of the previous week. This was also the lowest level since the beginning of May.

The mood shift in the market was triggered early in the week by the news of the U.S.-Iran understanding aimed at concluding the conflict in the Middle East, which was expected to be signed on Friday. The Strait of Hormuz, through which approximately one-fifth of global oil and liquefied natural gas passes, has long been a focal point of geopolitical tensions. The negotiations between the two nations over the final text of the memorandum concluded just minutes before its release, according to the Iranian news agency Tasnim, citing an unnamed official source.

According to Tasnim, the United States and Iran did not agree on provisions related to the Strait of Hormuz. As a result, changes were made to the document during the last days and hours of negotiations. Article 5 of the memorandum included a provision stating that Iran and Oman will provide "maritime navigation services" in the Strait of Hormuz. Additionally, the document was supplemented with a clause imposing a 60-day moratorium on charging fees to vessels passing through the strait. According to the source, after this period, Iran intends to begin charging services to ships using that waterway.

American President Donald Trump insisted on simultaneous opening of the strait and lifting of blockades immediately upon announcing the memorandum, according to the source cited by Tasnim. However, Iran did not accept this proposal, leading both sides to agree that the process of opening Hormuz would commence after the signing of the memorandum on Friday. The document will set the framework for continuing negotiations between Washington and Tehran regarding Iran's nuclear program and the easing of sanctions and unfreezing Iranian assets within a 60-day period.

On Monday, American Vice President JD Vance stated during an interview with CNBC that the United States expects the strait to remain open and that fees will not be charged for longer periods. “We will address such matters in technical negotiations,” he added.

The agreement between the United States and Iran has raised expectations about the future stability of international trade routes and the potential impact on global energy markets. With the Strait of Hormuz being a critical passage for global oil and gas transportation, any change in its status can have far-reaching consequences. The resolution of tensions in this region could lead to more stable and predictable conditions for maritime traffic, potentially reducing risks associated with geopolitical conflicts.

The implications of the agreement extend beyond immediate economic impacts. It signals a possible shift in regional dynamics, where traditional adversaries might find common ground in addressing shared concerns. The involvement of Oman as a mediator highlights the role of smaller states in facilitating dialogue among larger powers. Furthermore, the inclusion of specific clauses regarding maritime navigation and temporary fee suspensions indicates efforts to balance national interests with broader regional cooperation.

Looking ahead, the implementation of the memorandum will likely involve detailed discussions and agreements on practical aspects such as security arrangements, operational procedures, and financial mechanisms. These discussions will need to ensure that all parties' interests are adequately addressed while maintaining the integrity of the agreed-upon terms. The success of these negotiations will play a crucial role in determining whether the initial optimism surrounding the agreement translates into sustained peace and stability in the region.