European Gas Prices Ease on Hopes for Middle East Peace

European natural gas prices fell below €95/MWh on Tuesday on hopes of a resolution to the Middle East conflict, though prices remained near multi-year highs amid winter supply concerns. Saudi Arabia, Turkey and Pakistan held talks with Iranian officials on Monday, with Tehran describing the discussions as “very good". However, the prospect of an immediate peace remains uncertain as attacks on shipping in the Strait of Hormuz continue, heightening concerns over LNG supply security ahead of winter. European gas storage is about 75% full, the lowest seasonal level in records dating back to 2009, while Germany’s reserves stand at just over 61%. Replenishment could become more challenging as temperatures are forecast to fall across the continent, potentially boosting heating demand in the coming days. Unplanned outages in Norway are also adding to supply concerns. The tight supply situation raises the risk of intensifying competition between Europe and Asia for available cargoes.