European natural gas prices dropped 10% to €93/MWh on Monday, marking their sharpest decline since April 8, as renewed optimism over potential US-Iran talks eased fears of disruptions to Middle Eastern energy supplies. Iran’s supreme leader has reportedly authorized the government to engage in negotiations, following reports that President Donald Trump is inclined to allow more time for diplomacy. The pullback erased part of last week’s surge, which had driven prices above €100/MWh for the first time since 2022, with geopolitical tensions adding a substantial risk premium.
Despite the recent decline, supply risks persist as colder weather approaches and storage levels remain below target. Germany’s gas reserves were only 61.03% full as of November 2, well short of the government’s 70% target, while EU-wide storage was under 75%, a historically low level. Forecasts indicate temperatures 2°C to 4°C below seasonal norms in major German cities, with freezing conditions likely in the country’s southern and eastern regions.