European gas prices drop as Trump calls off Iran strike

European natural gas prices dropped sharply on Monday as traders unwound geopolitical risk premiums following U.S. President Donald Trump's announcement that he had called off a planned military strike on Iran and that diplomatic talks were set to resume the same day.

Diplomatic Opening Eases Supply Fears

The Dutch front-month contract at the TTF hub, Europe's benchmark for natural gas, fell to around €56–56.50 per megawatt-hour, while Britain's equivalent wholesale contract dropped to approximately 141 pence per therm. Trump said key Middle Eastern allies, including Saudi Arabia, urged him to suspend the attacks and prioritize negotiations, while reiterating his call for the swift reopening of the Strait of Hormuz.tradingview+2

The relief extended across energy markets. Crude oil benchmarks fell more than 5%, with Brent sliding toward $84 per barrel and WTI dropping to around $80. The pan-European STOXX 600 edged up 0.4% in early trading, with the travel and leisure sector gaining 2.1% even as energy stocks shed 2%.dmarketforces+1

July's Turbulence in Context

Monday's pullback followed a turbulent July in which European natural gas prices surged roughly 36%, their strongest monthly performance since March, driven by escalating hostilities between the U.S. and Iran. Joint U.S. and Saudi airstrikes in Iraq, Iranian missile strikes, and fresh U.S. military action inside Iran effectively choked off key shipping routes through the Strait of Hormuz, threatening Qatari LNG shipments that are vital to Europe's summer supply balance.investing+1

At the same time, unseasonably warm temperatures across central and southern Europe elevated power demand for air conditioning, diverting gas toward electricity generation and away from underground storage injection.investing

Storage Gap Keeps Markets on Edge

Despite Monday's easing, structural concerns persist. EU storage facilities ended July filled to roughly 55% capacity, well below the five-year average and last year's level at the same point, leaving replenishment trailing the pace needed ahead of the November 1 heating season. Energy analysts warned that European gas contracts are expected to remain sensitive to any setbacks in the upcoming U.S.-Iran negotiations.dmarketforces+2