European and British wholesale gas futures fell sharply on Friday, with the Dutch TTF and British NBP contracts each dropping 3.2%. The decline put both benchmarks on track for their worst weekly performance since mid-June, losing more than 8% over the five sessions.
Diplomatic signals drove the pullback. Reports indicated that US and Iranian negotiators are exploring a phased deal to reopen the Strait of Hormuz, a critical passage for global energy flows. Iranian Foreign Minister Abbas Araghchi said a plan had been submitted to the White House under which the strait could be reopened within seven days if certain conditions are met. Qatari officials have reportedly been mediating the discussions.
Oil markets reacted in parallel. Brent crude traded at $106.03 a barrel, down 0.53%, while West Texas Intermediate stood at $93.82, down 0.84%. That followed a volatile Thursday session that saw both grades climb as much as 5% after Saudi Arabia said it intercepted six ballistic missiles fired toward the Yanbu and Taif regions. Brent reached an intraday high of $108.23 before settling at $106.60.
Although the Strait of Hormuz remains contested, traders priced in a lower risk of further military escalation. LNG shipping operators have begun finding alternative routes around the Arabian Peninsula, reducing fears of a complete halt in physical deliveries. Profit-taking ahead of the weekend added to the decline in gas prices, with TTF futures slipping below €73 per megawatt-hour.
Supply issues have not disappeared. EU gas storage is roughly 70% full, about 12 percentage points below the same period last year. Norway pipeline maintenance is tightening flows into Europe, while the region competes with Asia for LNG cargoes. The European Central Bank has previously warned that gas price swings can spill into retail inflation.
Saudi Arabia’s East-West Pipeline, known as the Petroline, remains a key workaround. It carries about 4 million barrels per day, or roughly 4% of global supply, to Yanbu for Red Sea export. The pipeline restarted on September 22 after Houthi drone strikes knocked out two pumping stations earlier in the month, but it is still pumping at a reduced rate. Any new threat to Yanbu could undermine one of the few remaining routes for Saudi crude.
US inventory data added another signal. Commercial crude stocks rose by 3 million barrels in the week ended September 18, against expectations for a 641,000-barrel draw. Gasoline inventories fell 1.7 million barrels and distillates declined 400,000 barrels. Analysts at BMO Capital Markets said Saudi crude supply concerns are re-emerging, while JPMorgan said it had lost visibility on oil's direction for the first time since the war began.
