European Gas Prices Rise

European natural gas futures rose above €47 per MWh, rebounding after a sharp decline last week as uncertainty persisted over a potential US–Iran agreement. Both countries traded messages proposing changes to a draft deal intended to extend their ceasefire and reopen the Strait of Hormuz, although it remained uncertain whether the talks were advancing meaningfully. Tensions in the wider region also escalated, with Israel and Iran-backed Hezbollah in Lebanon exchanging heavy cross-border strikes, while an Iranian ballistic missile struck a Kuwaiti air base. The Strait has remained largely closed for three months, and the prolonged disruption has heightened concerns that Europe face difficulties rebuilding already relatively low gas storage levels ahead of the winter.

European natural gas futures rose to €47.5 per MWh but were on track for a weekly loss of over 2%, as markets weighed the prospect of a US-Iran peace deal that could resume flows from the Persian Gulf. Reports suggest that the two sides have reached a draft 60-day ceasefire and a framework for nuclear talks, which now awaits final approval from President Trump. However, comments from US Vice President JD Vance that a deal is "close" but "not there yet" capped price declines. An agreement could restore traffic through the Strait of Hormuz, which has remained largely closed for three months now. Prolonged disruption has raised worries that Europe could struggle to rebuild already relatively low storage levels ahead of next winter. Meanwhile, Europe is experiencing its first major heatwave of the season, with record temperatures forecast in cities such as London, Paris, and Madrid. European gas prices are poised for a second weekly decline, but were up nearly 3% for the month.

European natural gas futures rose above €48 per MWh, recouping losses from the previous session amid continued lack of any concrete resolution to the Middle East conflict despite recent optimism. Negotiations to end the war were thrown back into disarray after the White House denied Iran’s claim that a draft peace agreement was making progress. New US strikes on a military site and other targets near the Strait of Hormuz also highlighted risks to ongoing talks. A deal between the two sides could lead to the reopening of the Strait, which has remained largely closed for three months now. Continued disruption has fueled concerns that Europe may face difficulties replenishing inventories ahead of winter, with current storage levels at around 38%, well below the five-year average of more than 50% for this period. Adding to demand-side pressures, Europe is experiencing its first major heatwave of the season, with record temperatures forecast in cities such as London, Paris, and Madrid.