European natural gas futures declined nearly 5% to about $31.70, after comments by Donald Trump about the likelihood of only a limited strike on Iran reduced fears of major disruptions to LNG shipments through the Strait of Hormuz. Previously, markets had been concerned that intensifying tensions could threaten traffic through this crucial chokepoint, which handles roughly 20% of global LNG exports, including significant volumes from Qatar.
Although reports continued to surface of Iranian military exercises and a buildup of US forces in the region, traders appeared to reassess and price in a lower probability of an immediate supply shock. Prices also faced downward pressure from milder weather forecasts, stable Norwegian gas flows despite ongoing outages, and stronger renewable power generation in Germany.
Even so, storage levels across the European Union remain relatively low, at about 32% of capacity, with German gas inventories particularly tight at under 22%.
