Expectations of easing tensions in the Middle East have caused a sharp fluctuation in the market, with European natural gas prices experiencing a "rollercoaster" trend.

On March 23 (Monday), local time, after Trump hinted that hostile actions in the Middle East region may ease, the European natural gas market experienced a turbulent trading day. The benchmark natural gas futures prices experienced a sharp rise in the early morning session and then plunged significantly, with a one-day decline reaching as high as 9.3%, and a full day volatility as high as 18%. However, this impact is far smaller than that on the oil market. Part of the reason is that the damaged infrastructure will take time to repair, even if conflicts ease, the repair work may take several years. The direct cause of the drop in prices was Trump's public statement about postponing the strikes against Iran. Trump stated that after initiating negotiations to end the war, attacks on Iran's energy infrastructure and power plants will be postponed for five days. Trump's statement led to a sharp drop in natural gas prices, but Iran denied any contact with the United States. From a deeper perspective, the extreme sensitivity of the European natural gas market to the situation in the Middle East stems from a series of recent attacks on energy core areas. In the past week, the conflict between Israel and Iran directly affected the "arteries" of the global energy supply chain. Israel previously attacked Iran's core South Pars gas field, while Iran retaliated with strikes on Qatar's Ras Laffan Liquified Natural Gas (LNG) complex. As a highland of global LNG exports, about 20% of Qatar's global supply needs to be transported outside the Strait of Hormuz. According to Qatar Energy Company, last week's attacks from Iran damaged around 17% of the production capacity of Qatar's largest liquified natural gas facility, and repair work may take up to five years to complete. Analysts from companies like Rystad Energy and Wood Mackenzie stated that even unaffected production capacity would require at least two weeks to restart. Florine Schmidt, an energy strategist at Rabobank, stated: "Trump's promise to pause attacks 'still leaves the energy market facing the dilemma of actual supply shortages." Last weekend, analysts from Goldman Sachs mentioned in a report that natural gas prices in Europe and Asia may have to "further rise" to reflect the scale of the negative impact on global LNG supply. So far this month, the supply of liquified natural gas to Europe has remained relatively stable. However, if interruptions persist and competition with Asian liquified natural gas increases, the region may face challenges in filling storage facilities this summer. Seasonal price differences have made filling storage facilities unprofitable, but this situation is beginning to change. News of severe damage to Qatar's facilities last week boosted long-term natural gas contract prices in Europe. This improved critical seasonal price differences, helping to increase summer reserve strength. By Monday, the May benchmark contract premium had narrowed, trading close to parity with the November futures. The EU Energy Commissioner has called on member states to start replenishing natural gas reserves early to avoid supply competition in the summer. Energy Commissioner Dan Jrgensen wrote in a letter to member states that governments should lower reserve filling targets to 80% and make full use of the flexibility provided by EU law. As of the time of writing, near-month natural gas futures in the Netherlands (European natural gas benchmark prices) fell by 7.3% to 54.91 per megawatt-hour. Before Trump's speech, prices had risen by 6.6% in early trading. "The energy market will be very, very turbulent," said Alan, a senior researcher at Atlantic China Welding Consumables, Inc.'s Global Energy Center and president of Transversal Consulting. "There will be a lot of volatility. If you don't want to bear the huge pressure that comes from fluctuations, perhaps you should consider observing temporarily."