U.S. President Donald Trump has presented Iran with a new set of demands, keeping European natural gas prices near a two-week high as expectations for a deal to reopen the Strait of Hormuz and restore global supplies fade. Benchmark futures jumped nearly 10% in the previous session and are now trading around €62 per megawatt-hour.

The escalation came after Tehran reiterated its desire for compensation in negotiations to end the conflict, prompting Trump to issue multiple demands, including compensation for all victims of past attacks attributed to Iran. The renewed tensions have dampened the outlook for a recovery in liquefied natural gas (LNG) supplies, with roughly one-fifth of global LNG shipments still trapped in the Persian Gulf.

The continued supply disruption is hampering Europe's efforts to replenish key inventories ahead of winter. Local gas storage levels have fallen to their lowest since records began in 2009. Global gas prices have been volatile this month: a brief sell-off occurred earlier when markets bet on a potential deal over the Strait of Hormuz, but renewed conflict has since sent prices soaring again.

European LNG imports have been declining since April, as Asian buyers absorb more cargoes. Adding to the pressure, Europe has experienced multiple extreme heatwaves, boosting energy demand and further slowing the pace of gas injection into storage facilities. Another wave of scorching temperatures is expected in the region this week.

In a research note, industry analysts João Martins and Patricio Alvarez stated that the tightening supply-demand balance for European gas could leave storage levels 10% to 15% lower year-on-year by the end of October. The Dutch month-ahead futures, Europe's gas benchmark, rose 2% to €61.85 per megawatt-hour.