Benchmark Dutch and British wholesale gas prices fell on Wednesday morning on hopes that the conflict in the Middle East could soon come to a conclusion following comments by US President Donald Trump.
The benchmark Dutch front-month contract at the TTF hub was down €3.466 at €48.32 per megawatt hour, or around $16.40 per mmBtu, by 07:55 GMT, ICE data showed.
The British April contract was down 6.7p at 121.4p per therm, ICE data showed.
Trump and his Secretary of State Marco Rubio said the end of the war in Iran could be near, with Washington signalling potential for both direct talks with Tehran's leadership and a winding down of the conflict even without a deal.
Roughly a fifth of the world's LNG typically passes through the Strait of Hormuz, but shipping through the narrow waterway has come to a near-standstill since the US and Israel began strikes on Iran on February 28.
"Geopolitics is therefore likely to remain the dominant (price) driver," LSEG analyst Wayne Bryan said in a daily research note.
"We expect further downside in gas prices as geopolitical risk continues to unwind," he said.
Despite the fall, the benchmark EU gas contract remains almost 50 per cent higher than the end of February and before the conflict began, and analysts at Engie EnergyScan said recent high prices had led to some profit-taking.
"Given the high price levels reached recently, some market participants must have thought that taking profits was a wise decision…even if it meant buying back later," they said in a daily market comment.
EU Energy Commissioner Dan Jorgensen on Tuesday warned member states to prepare for "prolonged disruption" to energy markets as a result of the Iran war and said it was considering reviving energy crisis measures it used in 2022 when Russia slashed gas deliveries.
Emergency policies introduced in 2022 included an EU-wide cap on gas prices, a tax on energy companies' windfall profits, and targets to curb gas demand.
(Reporting By Susanna Twidale; Editing by Subhranshu Sahu)