European gas prices drop as U.S.-Iran pause eases supply fears

European wholesale natural gas prices dropped sharply on Monday as a mutual pause in military strikes between the United States and Iran eased fears over energy supply disruptions through the Strait of Hormuz. The Dutch TTF benchmark, Europe's primary gas pricing reference, fell to around €58.82 per megawatt-hour — a decline of nearly 7% from the previous session — pulling back from levels above €63/MWh reached last week, the highest since January 2023.sergeytereshkin+1

De-escalation Drives the Selloff

The price retreat followed two consecutive days without military strikes between Washington and Tehran. The United States paused attacks on Iran beginning Saturday, and Iran's army spokesperson confirmed on Sunday that Tehran had reciprocated, according to NPR and The Washington Post. Both sides signaled a desire to return to the interim ceasefire deal signed in mid-June, which has been undermined by weeks of escalating exchanges of fire since President Trump declared the agreement "over" on July 8.wikipedia+3

The conflict had driven TTF prices up more than 45% since the beginning of July, as damage to Qatar's Ras Laffan LNG facilities, diverted Atlantic cargoes to premium Asian buyers, and near-total disruption of traffic through the Strait of Hormuz tightened European supply. Monday's retreat suggests traders are pricing in a reduced — though not eliminated — probability of prolonged supply disruption.zandersgroup+1

Storage Concerns Linger

Despite the price relief, Europe's energy security outlook remains precarious. EU gas storage levels sit at roughly 54% of capacity, well below the five-year seasonal average and trailing the 80% pre-winter filling target that Equinor ↘ 1.56% CEO Anders Opedal said last week the continent is unlikely to meet. Reuters reported that market tightness and intensified competition from Asian buyers are hampering refilling efforts.live.euronext+1

Europe entered the 2026 injection season with its lowest storage levels since 2018, at just 31 billion cubic meters, according to Columbia University's Center on Global Energy Policy. HSBC ↗ 1.62% projected in March that European gas prices would average $14 per million British thermal units in 2026 — 40% higher than its prior forecast — owing to the Iran conflict's supply disruptions.energypolicy.columbia+1

The pause in hostilities offers a tailwind for eurozone inflation, but analysts caution that the ceasefire track remains fragile. Iran rejected a US ceasefire proposal as recently as July 23, and the 60-day interim deal timeline is running out with core disputes — including Iran's nuclear program and control of the Strait of Hormuz — unresolved.understandingwar+1