Key Highlights

  • European gas fell 2% to around €49.2 per MWh, retreating from a one-month high.
  • Prices had jumped over 12% in three sessions after fresh US strikes on Iranian targets.
  • Hormuz handles roughly a fifth of global oil and LNG trade, keeping Europe's winter restocking at risk.

European natural gas prices fell 2% to around €49.2 per MWh on Friday, retreating from a one-month high, after reports that US-Iran negotiations were continuing despite the latest round of military exchanges between the two countries. The pullback offered some relief to a market that had been on edge for much of the week.

A US official reaffirmed Washington's commitment to pursuing a diplomatic resolution with Tehran, helping ease concerns that the conflict could return to full-scale war and once again disrupt energy flows from the Persian Gulf. That reassurance was enough to unwind some, though not all, of the risk premium built into prices over recent sessions.

The scale of the earlier move underscores how sensitive European gas remains to developments in the Gulf: prices had surged more than 12% over the previous three trading sessions after the US carried out fresh strikes on Iranian targets, in response to attacks on vessels transiting the Strait of Hormuz. Iran retaliated by targeting American bases in the region over the following two nights, prompting President Trump to declare that the prior ceasefire was over — even as he indicated he would not stand in the way of continued talks.

That nuance — declaring a ceasefire ended while still leaving room for negotiation — has left markets trying to parse how seriously to weight the risk of a broader conflict. Investors remain focused squarely on shipping activity through the strait, which handles roughly one-fifth of global oil and LNG trade, given the direct bearing any renewed disruption would have on Europe's ability to secure cargoes.

That concern is particularly acute given the timing: Europe is in the midst of its seasonal push to replenish gas storage ahead of winter, a process that depends heavily on steady LNG imports. Any sustained disruption to Gulf shipping routes would complicate that effort, keeping European prices sensitive to every twist in the US-Iran standoff over the coming months.