European natural gas prices continued their downward trajectory as optimism grew regarding the return of Middle Eastern supplies to the global market, following a provisional agreement between the US and Iran to reopen the Strait of Hormuz.

After earlier fluctuations, benchmark futures declined, with the cumulative loss over four sessions expanding to approximately 16%. US President Trump reaffirmed that the Strait of Hormuz would resume full operations by Friday. Earlier reports indicated that Qatar, the region's largest producer, plans to swiftly increase liquefied natural gas (LNG) output once safe passage through the strait is restored.

Prior to the conflict that nearly halted export shipments from the Persian Gulf, roughly one-fifth of the world's seaborne gas transited through this critical chokepoint. Numerous questions remain regarding the implementation of the US-Iran agreement, including concerns over shipping security.

Despite the recent drop, European gas prices remain about 30% above pre-crisis levels. However, Citigroup stated in a report on Tuesday that prices have room to fall further as the "conflict de-escalates."

As of 3:53 AM local time in Amsterdam, the European benchmark, the Dutch front-month futures contract, was down 1.6%, trading at €41.90 per megawatt-hour. Citi has revised down its price forecast for the second half of the year to €37.