European natural gas prices retreated as market sentiment improved, driven by growing expectations that the United States and Iran could resume diplomatic engagement to resolve their conflict. After surging more than 4% last Friday, the continent's benchmark gas futures followed oil prices lower in a broad risk-on move.

President Donald Trump indicated in a Fox News interview that he would "possibly" be willing to meet with his Iranian counterpart this week on the sidelines of the United Nations General Assembly in New York. Several other Gulf state leaders are also scheduled to hold talks with Trump during the gathering, adding further weight to the diplomatic momentum.

This progress on the diplomatic front is expected to bolster optimism regarding the situation in the Strait of Hormuz, where liquefied natural gas shipments have been severely disrupted since March. The potential easing of tensions in the region offers some relief to traders monitoring the critical waterway.

Although Europe remains in a tight supply position heading into the heating season, US Central Command chief Brad Cooper noted over the weekend that the volume of crude oil and LNG passing through the vital shipping lane has already recovered.