Europe’s Gas Prices Drop 5% On Renewed U.S.-Iran Talks Optimism

European natural gas prices fell more than 5% to around €46.3 per megawatt hour, their lowest level in two weeks, amid optimism that the United States and Iran could soon reach a deal to reopen the Strait of Hormuz following U.S. President Donald Trump’s statement that a deal was nearing finalization after extensive calls with Middle Eastern leaders and Israeli Prime Minister Benjamin Netanyahu.

Hours later, Trump shifted his tone on the social media site, revealing that he had instructed U.S. representatives not to rush into a deal because “time is on our side.” He added that the U.S. naval blockade on Iranian ports will remain in full effect until a final pact is formally signed.

According to U.S. and regional officials, the multi-stage interim draft focuses on winding down the months-long military conflict that erupted in February 2026. The deal outlines a process to fully reopen the vital global shipping lane without tolls, resolving the global energy crunch. Iran would receive targeted sanctions relief and the gradual unfreezing of up to $20 billion to $25 billion in assets currently held in foreign banks, such as Qatar. Iran has reportedly agreed in principle to eventually hand over or dispose of its highly enriched uranium stockpile, with the Trump administration maintaining a “no dust, no dollars” policy regarding asset relief. However, Iranian Foreign Ministry spokesperson Esmail Baghaei recently sought to temper expectations, stating that while positions have converged, a signing is not imminent.

Last week, executives at Norway’s Oil & Gas giant Equinor ASA (NYSE:EQNR) warned that European gas storage faces a critical shortfall if the Strait of Hormuz closure lasts for another 1–3 months, risking a failure to meet winter inventory targets.

Europe’s gas caverns are currently hovering just above 35% full, lagging behind the typical 50% seasonal norm. Market conditions currently make winter gas supply contracts cheaper than summer contracts, which drastically slows down the pace at which energy companies want to buy and inject gas into reserves right now.

By Alex Kimani for Oilprice.com

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