EU Natural Gas Falls Further Toward 20-Month Low

European natural gas futures fell to around €54 per MWh on Friday, as traders weigh up the latest developments in US-Iran talks. President Trump delayed his deadline for Iran to agree to a ceasefire deal by 10 days, noting that negotiations were going well, even as Iran rejected the US peace proposal and denied that any talks had taken place. The closure of the Strait of Hormuz has forced energy shipments to be rerouted, sharply reducing LNG availability, while the largest LNG plant in Qatar remains offline, with repairs estimated to take three to five years. Europe’s gas storage is critically low at around 28%, heightening vulnerability as competition with Asia for LNG intensifies. Experts warned that energy shortages could emerge within weeks if LNG shipments do not resume.

European natural gas futures rose to €55.7 per MWh on Thursday after four consecutive days of declines, amid uncertainty over a potential ceasefire in the Middle East conflict. While the US insisted negotiations were ongoing to end the hostilities, Iran dismissed the US peace plan and outlined its own conditions instead. The conflict has kept the Strait of Hormuz closed, curtailing natural gas supplies from the region, while the largest LNG plant in Qatar remains shut, with repairs estimated to take three to five years. Europe now faces increased competition with Asia for LNG cargoes, as it seeks to refill its depleted gas storage ahead of the winter season. Currently, Europe’s total gas storages are about 28% full, the lowest level for this time of year since 2022. Major oil companies have warned that if the war drags on, Europe could face energy shortages as soon as April.

European natural gas futures extended their decline on Wednesday, falling more than 3.5% to €52 per MWh on prospects of a potential ceasefire in the Middle East that could ease supply disruptions. President Donald Trump said on Tuesday the US was making progress in negotiations with Iran and had sent a 15-point settlement proposal aimed at ending the war. However, some analysts remain skeptical about the likelihood of a swift resolution, expecting markets to stay volatile. The war, now in its fourth week, has blocked shipments through the Strait of Hormuz, cutting off around 20% of global LNG flows, while the largest LNG plant in Qatar remains offline, with about 17% of its capacity are damaged. Shell’s CEO has warned that Europe could face energy shortages as early as April if the conflict continues.