The price of European natural gas has risen significantly. Market observers cite geopolitical tensions as the reason. Are record levels like those at the beginning of the Ukraine war looming?
The price of European natural gas has risen to its highest level this year. The leading TTF futures contract for delivery in one month rose in Amsterdam by more than 5.7 percent to 38.78 euros per megawatt hour (MWh).
The market referred to the attacks by Ukraine on Russian territory. According to recent reports, fighting has broken out in the Russian region of Kursk. This is apparently taking place near Sudza, an important feed-in point for natural gas. This is transported to Western Europe via Ukrainian pipelines. As the Bloomberg news agency reports, the Gazprom Group is currently still assuming normal gas deliveries.
Fear of new war in the Middle East
The price of gas has been rising since the end of July, with prices increasing significantly in recent trading days. Another reason for the price increase is investors’ fear of a new war in the Middle East and the possible impact on gas supplies from the region. There is great concern about an escalation of the conflict between Iran and Israel. US Secretary of State Antony Blinken recently issued a strong warning about the situation becoming more serious.
After the consequences of the war in Ukraine temporarily drove the price of gas to a record high of over 300 euros per MWh in 2022, prices have remained relatively stable in the range of between 30 and 40 euros in recent months. There was an outlier at the end of February, when the price of gas temporarily fell to around 22 euros.
Source: Stern
