Europe gas off multi-week lows as Middle East peace talks hit impasse

European and British wholesale natural gas prices surged on Thursday, recovering 1.6% each as doubts resurfaced about a swift diplomatic solution to the U.S.-Iran conflict. The Dutch TTF contract reached 74.50 euros per MWh, after hitting its lowest level in nearly three weeks. The British NBP contract mirrored the rise, climbing to 185.85 pence per therm.

Initial market enthusiasm for potential U.S.-Iran talks faded when President Trump labeled Iran a "regional bully" in his UN speech and suggested annihilating the Islamic Republic if hostilities intensified. Iran's leaders and President Masoud Pezeshkian rejected the threats, with the Revolutionary Guard warning of "crushing" counter-strikes and refusing to back down under naval blockades.

This escalating diplomatic stalemate has derailed hopes that a quick peace deal could reopen the Strait of Hormuz, potentially disrupting LNG deliveries to Europe. Storage shortages in European underground gas reserves continue to support winter energy prices. EU storage levels stood at 70% of capacity, 12 percentage points lower than the same period in 2025, despite ongoing injections.

The European Central Bank has warned that energy volatility remains a threat to inflation as the heating season approaches.