European natural gas prices fell more than 4% on Wednesday, dropping below €64 per megawatt-hour and extending the previous session’s losses. The decline came as signs of diplomatic progress in the Middle East eased concerns about potential disruptions to energy supplies.
On Tuesday, Pakistan reported significant progress in talks with Tehran aimed at ending the conflict. At the same time, the foreign ministers of Iran and Oman said they had discussed plans for a temporary transit corridor through the Strait of Hormuz, as well as a project to clear mines from the waterway. The United States’ decision to send diplomats back to the region further reduced fears of an escalation that could threaten energy routes.
Nonetheless, supply risks persist. A continuing maritime blockade is still disrupting physical LNG flows from the Persian Gulf, with cargoes from major exporter Qatar facing substantial delays. In addition, unusually hot weather across Europe is boosting electricity demand for air conditioning, slowing the rate at which gas can be injected into storage sites for the coming seasons.
