LNG

The US-Iran memorandum has been signed by both presidents, ahead of Friday's scheduled ceremony, and commits Iran to clearing Hormuz of mines within 30 days. Yet ADNOC's carriers are holding back: four sit dark off Khor Fakkan, home from earlier delivery runs, even as Qatar's Disha ran the strait in the open just as the deal broke.

The Strait of Hormuz, a critical chokepoint for roughly 20% of global LNG supply, will reopen to shipping on Friday, June 19, after the US and Iran formally sign a peace deal to end the war, US President Donald Trump confirmed. Brent crude futures fell 4.1% in early trading on Monday on the news.

QatarEnergy CEO Saad al-Kaabi has identified shipping logistics as the biggest hindrance to resuming LNG exports from Ras Laffan once the Strait of Hormuz reopens, underlining tight tanker availability and routing constraints may impact the recovery of one of the world’s largest LNG export terminals.

An US-Iran peace deal resolution is expected “very soon,” Pakistan’s foreign ministry says – which would hit future prices immediately – but physical LNG and oil flows, deliveries, and broader supply normalization would lag by weeks, Rystad Energy cautions.

European wholesale gas prices fell below €30 per MWh on Monday, a level not seen since February 2024, as expectations for a Ukraine peace deal put bearish pressure on prices. The Dec-2025 TTF contract also slipped below this threshold amid hopes that the EU’s proposed ban on Russian pipeline gas could be softened.

Financial close on US LNG export projects could be at risk by a stable peace deal between Russian and Ukraine, analysts warn. Europe would subsequently rush to accommodate more Russian pipeline gas imports of up to 50 bcm per year, while the lifting of sanctions on Russian LNG would raise exports to 12 mtpa – undermining the economics of US LNG.

In the event of a ‘stable peace’, Wood Mackenzie expects European gas prices at the TTF trading hub to fall well below the US$8-9 per mmbtu that are forecast for 2028/29.

A collapse in TTF prices, in return, would lead to years of US LNG capacity underutilisation and delays to several expected FIDs on well-advanced LNG export projects.

US LNG projects may become collateral damage

As a knock effect, Henry Hub gas prices would plunge since the lower-than-expected LNG exports create a length in gas supply in the United States. This oversupply supports greater gas-burn for power generation and may well reduce wholesale electricity prices to the benefit of American households and industries.

But Wood Mac’s vice president of Gas and LNG research, Massimo Di-Odoardo warned that with an average of 25 mtpa of liquefaction capacity in the United States and Mexico at risk of underutilisation over the next five years, “US LNG would be the collateral damage,”

More shipments needed in event of no peace

On the other hand, a failure to reach an agreement would results in "stronger for longer" gas prices as even less Russian supply comes to market.

“A continuation of the war could see the EU double down on sanctions, pushing even harder to achieve its ambition of independence from Russian energy - banning LNG imports from the Yamal LNG project and the 15 bcm a year TurkStream pipeline,” Di-Odoardo noted.

This scenario strengthens the need for more LNG supply, with US and Qatar capitalising on more investment opportunities.

"The outcome of ongoing negotiations for a peace agreement between Russia and Ukraine remains highly uncertain,” he said, concluding: “All scenarios are possible, including potential combinations of them, however, recent development suggest a peace agreement where the US and EU take different approaches to lifting sanctions, appears more likely.”

Peace between Ukraine and Russia – if and when agreed – will unlikely lead to large additional volumes of Russian gas returning to Europe beyond current LNG and Turkstream flows. According to Fitch Ratings, the resulting implications for the TTF gas price range from "negligible to a decrease of 50 to 60 percent."

A full return of Russian gas supplies to pre-war levels is highly unlikely as the EU has nearly fully replaced it with alternative sources, says Angelina Valavina, head of EMEA Natural Resources and Commodities at Fitch Ratings. The remaining small volumes of natural gas from Russia that are currently delivered to Europe supplement LNG and other imports. "While a peace agreement could see partial resumption of additional volumes, they would likely be limited by geopolitical considerations, affecting the chosen routes," she explained. 

New LNG projects coming to market in the medium term will create a surplus that will further diminish demand for cheap Russian gas. “We forecast new large LNG supply from Qatar and the US to come onstream in 2027-2028, putting pressure on gas prices,” Valavina said in a market note.

The US has become an important LNG exporter, while Europe offers a competitive market. QatarEnergy is expanding LNG production capacity to 126 million tonnes per annum (mtpa) by 2028 from 77 mtpa currently. US government analysts estimate the country’s LNG export capacity will grow by 100 bcm between this year and 2028.

Sanctions on Russia have limited Gazprom’s supply routed to the EU to the Turkstream pipeline and LNG. Together they account for just 13 percent of imports year-to-date.

Flows via the Nord Stream, Ukraine, and Yamal pipelines have been halted. Russian pipeline gas supplies to the EU fell to 33 bcm in 2024 – split evenly between Turkstream and Ukraine pipelines – down from 153 bcm four years earlier. This equates to a fall from 41% to 11% as a share of total EU imports, or to 18% if including LNG.

Russian oil headed elsewhere

Sanctions have slightly reduced Russian oil exports, though this has not hurt state-owned enterprises much given that discounted Russian oil is being redirected to China, India, and Turkey. According to Fitch findings, Russian oil and product exports fell by 0.5 million barrels of oil equivalent per day (MMboepd) in 2024 from 2022. Despite a 2.8 MMboepd drop in EU exports, exports to China, India, and Turkey increased by 1.8 MMboepd.

Oil production in Russia has not been significantly impacted by sanctions, Fitch analysts find, pointing at an oversupplied global oil market with OPEC+ spare capacity of 5.6 MMbpd. “Russian oil production and exports account for 10% and 5% of global demand respectively, which is insufficient to tighten the oversupplied market," Valavina concluded.

The Trump administration is working on ways to ease sanctions against Russia, if the war in Ukraine comes to an end. Greater LNG exports from Vysotsk, Portovaya and the first two 6.6 mtpa trains of Arctic LNG 2 facilities are seen as ‘options’ for the United States to offer a sanctions relief in exchange for peace.

London-based Energy Aspects remains bullish on TTF bal-2025 prices, assuming Russian gas exports to Europe do not return – at least not any time soon. Gazprom had terminated pipeline gas transits through Ukraine at the start of 2025, and Russian LNG is currently mainly reaching Europe via the Kremlin’s shadow fleet of ageing tankers.

Enabling Russian LNG exports under a US sanction relief would contradict American commercial interest and President Trump’s ‘energy dominance policy.’

Yet, foreign policy of the new US administration is anything but certain: “It is possible that Trump’s drive for peace and to see Russian gas return will override his energy dominance policy and desire to narrow the trade deficit with Europe. We are not yet making this our base case, as Trump has other sanctions relief measures he can deploy,” Energy Aspects stated, referring to options like loosening US financial and trade sanctions that impact the whole Russian economy.

Brokering a peace deal will take time, and may well be month away as the positions still differ starkly. The longer it takes, the less time would be left for Russian gas supply to help bolster Europe’s stock-build prior to the next winter.

Expiry of US Treasury waivers impact Russian exports via Turkey

Supply risks escalated after temporary US Treasury waivers that permit gas purchases via the now-sanctioned Gazprombank will lapsed.

The US Treasury confirmed the General License 8L expired as scheduled on Wednesday last week as the Trump administration is putting pressure on Russia to improve his and Ukraine’s stance in peace talks with the Kremlin. Letting the license expire means that Russian banks now can no longer access US payment systems for energy financing or transactions related to oil and gas exports.

If no alternative payment mechanisms can be agreed, Europe might lose out on the 16 bcm/y that is shipped to European buyers through TurkStream, the 24 bcm/y shipped to Turkey through TurkStream and Blue Stream pipelines. Moreover, the 38 bcm/y of Russian gas exported to China through Power of Siberia pipeline and potentially around 5–10 bcm/y transported to buyers in Central Asia is also at risk.

Doubts mount that the US Treasury will extend waivers following of Russia’s bombardment of Ukrainian gas and power infrastructure in recent weeks. Destructions and halted gas flows from Gazprom made Naftogaz turn to elsewhere for supply. Ukraine has, in fact, stepped up its imports from Europe over recent weeks and Energy Aspects expects it to take 1.7 bcm from Europe this year, in contrast to net exports of 0.7 bcm last year, cautioning there is “more upside than downside risk” to these numbers.