Expert analysis
Middle East / Strait of Hormuz
The market is increasingly pricing in de-escalation (TTF -7%) after Marco Rubio said a US–Iran agreement could potentially be announced as early as today.
- Trump said the memorandum is “largely done”
- Rubio suggested the deal could include the reopening of the Strait of Hormuz
- additional LNG and oil tankers successfully crossed the strait
- TTF has already fallen to a 2-week low
At the same time, the market remains extremely fragile.
Key unresolved issues:
- Iranian uranium enrichment
- sanctions
- long-term control/security of Hormuz
Rubio also implied that if there is no “good and sensible” agreement, the military/escalation option remains on the table.
Gas market / TTF
TTF fell to an intraday low of ~45.4 EUR/MWh on Monday, the lowest level since 11 May.
Bearish factors:
- growing optimism around the reopening of Hormuz
- potential improvement in Middle Eastern LNG flows
- additional Qatari cargoes headed toward Pakistan and China
- the market is increasingly pricing out a full supply disruption scenario
However, the fundamental picture is still far from comfortable:
- EU storage levels around ~37.8%
- ~8 percentage points below last year
- injections remain relatively slow
- the LNG market is still expected to stay very tight this summer
That means:
- new geopolitical headline
- an LNG outage
- a hurricane
- nother Middle Eastern incident
- or stronger Asian demand
could quickly bring volatility back into the market.
Asia / LNG demand
Increasing competition for cargoes.
EUA
EUA prices continue to stabilize around the ~75 EUR/t range.
- the market is waiting for the July 15 ETS review
- speculative long positioning has declined
- meanwhile, RePowerEU-related additional auctions may soon expire
This is important because:
- extra EUA supply has been weighing on the market
- the EUR 20bn target is nearly completed
Medium term, this could become more supportive for carbon prices.
European power market
Negative prices are becoming an increasingly structural phenomenon across Europe.
- from May 29, Epex Spot will lower the price floor to -600 EUR/MWh
- extreme solar output combined with weak weekend demand is increasingly visible
This summer could bring further increases in:
- intraday volatility
- the cannibalisation effect
- the strategic value of battery/storage projects
Q3 risks:
- cooling demand risk
- nuclear availability risks
- higher river water temperatures
- higher gas prices
Bearish factor: summer weather in France could turn more stormy and rainy than expected.
SEE region / infrastructure
Grid problems are becoming increasingly visible:
- overvoltage
- connection bottlenecks
- lack of flexibility
The big question for next week:
Will #gnumarket continue moving on herd mentality and positioning flows, or are we about to see real fundamental changes?
Source:
Analysis written by: Tóth Eszter Lilla
18.05.2027