LONDON (Realist English). On June 2, global energy markets closed lower, but the week began with sharp, divergent moves driven by conflicting signals surrounding Iranian-American negotiations and military escalation in the Middle East.
After soaring to monthly highs, the “war premium” partially eased following US President Donald Trump’s statements that dialogue with Tehran continues.
Nevertheless, the market remains extremely volatile: traders are still pricing in the risk of a prolonged blockade of the Strait of Hormuz.
Reversal after dramatic rise
On the morning of June 2, oil prices showed a notable decline, reacting to Trump’s statements the day before. As of noon Moscow time (trading data):
- Brent (August futures) fell 1.82% to $93.25 per barrel.
- WTI (July futures) fell 1.71% to $90.58 per barrel.
The situation looked dramatically different on the evening of June 1. During that session, Brent had spiked more than 5%, ultimately gaining 2.22% (to $94.98 per barrel), while WTI rose 5.5% (to $92.16 per barrel).
Main drivers of daily volatility
The morning of June 1 began with panic: Iran’s Tasnim news agency reported a suspension of talks with the US in protest against Israeli strikes in Lebanon. At the same time, Iranian authorities announced the possibility of completely closing the Strait of Hormuz and the Bab el‑Mandeb Strait. This triggered an immediate jump in oil prices of more than 5% to a new monthly high.
However, later that same day, US President Donald Trump confirmed on Truth Social that negotiations with Iran are continuing.
He expressed confidence in Tehran’s desire to reach a deal and said that a memorandum of understanding on the Strait of Hormuz could be signed as early as next week.
That statement immediately reversed the market, triggering a downward correction.
Thus, oil prices continue to balance between two scenarios: the risk of renewed escalation if diplomacy fails, and the hope of a swift reopening of the strait.
Additional factors
- Military backdrop. Amid the talks, the US and Iran continue to exchange strikes, while Israel has expanded its ground operation in Lebanon, increasing regional instability.
- Physical flows. Even if an agreement is signed immediately, according to Société Générale, significant oil flows through the Strait of Hormuz will not resume until the end of August at the earliest, and end‑users in Asia will see relief only by the end of October.
Gas market: Europe holds, US rises
European natural gas prices continued to decline on June 2 after spring spikes.
TTF (Dutch hub): futures opened at $577.3 per 1,000 cubic metres, about 2% below previous levels. In the morning, the indicator was near $581.
For context: in March 2026, amid heightened tensions in the Middle East and damage to LNG terminals in Qatar, prices exceeded $600 for the first time since February 2023, peaking at $853.7 on March 19.
Henry Hub (US): The US gas market, by contrast, remains bullish. Futures contracts are trading near $3.30 per MMBtu after rising more than 19% in May. Key supporting factors are record demand from LNG exports and expectations of a hot summer, which will increase cooling demand.
Forecasts and expert opinions
Analysts from major banks and agencies maintain a wide range of forecasts, emphasising the market’s high dependence on the outcome of Iranian-American negotiations.
- Société Générale warns that even if a 60‑day memorandum is implemented, prices will remain above $200 per barrel in the summer, with normalisation of inventories delayed until the end of 2027. In a prolonged disruption scenario (lasting until year‑end), Europe’s inventory deficit would leave it with less than 10 days of cover.
- Some international bank analysts suggest short‑term price spikes to $120–130 in the event of further escalation.
- Goldman Sachs models Brent at $85 per barrel in 2026 and $74 in 2027 (compared with previous estimates of $76 and $69, respectively), reflecting expectations of a gradual recovery in supply while a “war premium” remains.
- UBS previously forecast an average annual Brent price in the range of $85‑95 per barrel assuming a normalisation of the geopolitical situation.
- Rebecca Babin, energy sector analyst at CIBC Private Wealth Group, said that the absence of active negotiations would deprive the market of “safety guarantees” and increase volatility.
Energy markets remain hostage to the geopolitical drama in the Middle East. Oil closed the daily session lower, but traders are in no hurry to remove the “war premium” from prices, as the threat of closing the Strait of Hormuz persists.
European gas is falling on hopes of a ceasefire, while the US market continues to strengthen on export demand. The coming days, when the fate of the memorandum will be decided, will determine the further direction of prices – either towards $80‑90, or back to triple‑digit highs.