European natural gas prices declined after Israel and the United States attempted to ease concerns over potential further attacks on energy facilities in the Persian Gulf. Benchmark futures fell by as much as 3% on Friday. At the time of writing, the Dutch front-month contract, Europe's gas benchmark, was down 2.2% to €60.50 per megawatt-hour. Despite this, following a significant jump in the contract the previous day, it remains on track for a weekly gain of approximately 20%. Prices have doubled since the outbreak of the conflict.

The decline follows retaliatory strikes by Iran on oil and gas assets across the Middle East after its gas fields were attacked. Previously, a missile strike on Ras Laffan Industrial City in Qatar damaged two liquefied natural gas (LNG) production trains. Combined, these two trains have an annual production capacity of 12.8 million tonnes, accounting for about 17% of Qatar's LNG exports. Repair work could take up to five years to complete. This action pushed oil prices higher and drew condemnation from U.S. President Donald Trump, while Israel stated it would no longer target energy infrastructure.

Although gas shipments from the LNG facility had already been suspended earlier this month due to the conflict, the latest damage could lead to elevated gas prices in Europe and Asia for a longer duration. Analysts at Morgan Stanley forecast a 4% supply deficit for gas this year and suggested that a prolonged shutdown of the two damaged trains could impact predictions of a gas supply surplus for 2027-2028.

In Europe, these attacks have raised concerns among politicians, with countries preparing for potential long-term energy price shocks. Traders across Europe are anticipating a volatile summer market as they work to replenish storage before the next winter. While the majority of gas that typically transits the Strait of Hormuz flows to Asia, a physical closure of the waterway could affect Europe, as both regions compete for increasingly limited global LNG supplies.

Meanwhile, temperatures across much of Northwestern Europe are expected to drop later this month, which could increase demand for the fuel. Concerns over prolonged supply disruptions are also reflected in the options market. Implied volatility, a measure derived from the cost of options contracts, has more than doubled since the war began, highlighting the persistent risks in the market for the coming months.