Dutch and British natural gas contracts fell around five per cent on Monday morning on news the US and Iran will sign an agreement to end their war and reopen the Strait of Hormuz, but the timing of how quickly Persian Gulf production can recover remains unclear.
The benchmark Dutch front-month contract at the TTF hub was down €2.41 at €44.36 per megawatt hour by 06:51 GMT, data from the Intercontinental Exchange showed.
The British front-month contract was down 5.74 pence at 106.17 pence per therm.
Both contracts are trading at their lowest levels since early May.
US and Iranian officials said they had reached an agreement to end their war and reopen the Strait of Hormuz, a major shipping route whose closure has trapped about 20 per cent of global liquefied natural gas supply in the gulf.
The strait would open on Friday, US President Donald Trump said, though EU Commission President Ursula von der Leyen urged an immediate reopening.
One LNG tanker chartered by India's Petronet crossed east via Hormuz on Monday, ship tracking data showed.
The key question is how quickly production in the region can restart, analysts said.
"It is uncertain how long it will take before production is up and running again. Qatar has suffered major damage to its gas production facilities and infrastructure. Repairs may take time," Thina Margrethe Saltvedt, chief analyst at Nordea, said.
The fundamental picture for gas also remains quite strong, with low inventories in Europe and rising LNG demand in Asia, said Arne Lohmann Rasmussen, chief analyst at Global Risk Management.
Forecasts of hot weather next week could also lift gas-for-power demand in Europe amid lower wind output and potential curbs at French nuclear plants, said LSEG analyst Ulrich Weber.
EU gas storage sites were last 44.34 per cent full, compared with 53.02 per cent at the same time last year, Gas Infrastructure Europe data showed.
(Reporting by Nora Buli; Editing by Jan Harvey)