European and British wholesale natural gas futures moved higher on Tuesday, recovering part of the sharp losses recorded at the start of the week.
Both markets gained around 1.6% as traders took profits and reassessed geopolitical risk following Monday’s heavy sell-off.
European Natural Gas Prices Rebound
The benchmark Dutch front-month TTF contract rose 1.6% to around €78.80 per megawatt-hour (MWh).
The move lifted prices from a near two-week low reached during the previous session.
In the UK, the equivalent NBP wholesale gas contract also climbed 1.6%, trading near 195.40 pence per therm.
The rebound followed a steep decline on Monday. Both Dutch and British gas contracts fell more than 7%, marking their biggest one-day drop in almost two months.
US-Iran Talks Drive Market Sentiment
The sell-off came after U.S. President Donald Trump signaled openness to bilateral discussions with Iranian President Masoud Pezeshkian.
Pezeshkian is attending the United Nations General Assembly in New York this week.
The possibility of renewed direct talks between the United States and Iran quickly improved sentiment across commodity markets.
Investors began pricing in the possibility of progress toward ending the seven-month Middle East conflict. That reduced some of the risk premium linked to shipping through the Strait of Hormuz.
However, traders became more cautious again on Tuesday.
A diplomatic breakthrough remains uncertain, while physical energy flows through key Persian Gulf shipping routes continue to face significant restrictions.
Alternative Shipping Routes Ease Supply Concerns
Broader energy markets also helped limit the upside in European natural gas prices.
Brent crude futures edged lower on Tuesday after falling around 3% in the previous session.
Reports suggested that major energy companies and shipping operators were increasingly using alternative routes to avoid Persian Gulf bottlenecks.
These measures include overland pipelines and ship-to-ship loading operations near Oman.
The expansion of these alternative routes has helped reduce some concerns about energy supply disruptions.
ECB Warns of Inflation Risks
Meanwhile, the European Central Bank highlighted another risk linked to elevated natural gas prices.
In its Economic Bulletin, the ECB said changes in European energy markets since 2022 have made wholesale gas price movements more directly linked to consumer inflation.
According to the ECB, increases in wholesale natural gas prices can now feed through to retail inflation within one to three months in more than half of euro area economies.
This means renewed volatility in European gas markets could have broader implications for inflation and monetary policy across the region.
