European Gas Prices Rise After Sharp Drop

European natural gas prices rose toward €74 per megawatt-hour on Tuesday, having slumped nearly 8% to a two-week low in the previous session on renewed diplomatic efforts to end the Middle East war and improving vessel flows. Investors are awaiting developments on potential talks between US President Trump and Iranian President Pezeshkian this week, as any progress toward resolving the conflict could reduce fears of prolonged disruptions to energy flows through the Strait of Hormuz. Meanwhile, reports of increasing numbers of LNG tankers and crude carriers finding alternative routes out of the Gulf have also helped ease supply concerns. Lower-than-expected volumes sought in Germany’s latest gas-storage tenders also added downward pressure on prices, although Germany’s historically low storage levels continue to highlight underlying supply risks ahead of the winter heating season.

European natural gas prices fell 7% to €74 per megawatt-hour, the lowest in two weeks, after details of Germany’s latest gas storage tenders indicated lower volumes than initially expected. Trading Hub Europe launched several tenders to secure sufficient gas availability for the first quarter of 2027, amid concerns over storage levels ahead of winter. Also, weather forecasts point to a late-summer heat spell next week, with temperatures across Northwest Europe expected to rise around 6°C above normal, potentially reducing gas demand. Additionally, President Donald Trump signaled that US-Iran diplomacy could resume, including the possibility of meeting Iran’s president during the UN General Assembly in New York. Progress toward ending the conflict could reduce concerns about potential disruptions to energy flows through the Strait of Hormuz, an important route for global LNG shipments.

European natural gas prices fell below €77/MWh on Monday, erasing most of the previous session’s gains as traders monitored diplomatic efforts to end the Middle East conflict. President Donald Trump said he would probably be open to meeting Iranian President Masoud Pezeshkian, who is expected to attend the UN General Assembly later this week, though Tehran has yet to respond to the remarks. Any progress toward de-escalation could ease concerns over prolonged LNG supply disruptions. However, supply risks remain elevated, with the conflict continuing to restrict LNG shipments through the Strait of Hormuz. European gas storage facilities were around 68.5% full, still below the seasonal average. The situation is further complicated by intense competition with Asia and ongoing maintenance work on Norway’s gas infrastructure. With the heating season approaching, the market remains highly sensitive to extended supply disruptions, increasing the risk of price volatility.