🔶 Europe’s gas price hits its highest level since end of 2022

🔶 Europe’s gas price hits its highest level since end of 2022

Following the intensification of the crisis in the Persian Gulf and concerns about disruption to LNG supply, the price of natural gas in Europe on Wednesday, September 9, for the first time since the end of 2022 reached nearly 80 euros per megawatt-hour.

A natural gas futures contract for one-month delivery on the Amsterdam exchange rose on Wednesday to 79.11 euros per megawatt-hour. This index, which is the main benchmark for gas prices in Europe, then reached 78.64 euros in subsequent trading; a figure that was 1.22% higher than the previous day.

With this increase, Europe’s wholesale gas price has moved above the level recorded at the start of the war in Iran as well. In March, coinciding with the start of the war, the gas price for a short period had risen above 70 euros per megawatt-hour.

The last time Europe’s gas price reached a level higher than this was in 2022, when the stoppage of Russian gas exports after the war in Ukraine pushed the European energy market into crisis. During that period, gas prices in some instances rose to more than 300 euros per megawatt-hour.

Although the current price is still far from the 2022 crisis peak, the recent upward trend has created fresh concerns about Europe’s energy security.

The main factor driving the rise in prices is concern that the crisis could continue in the Strait of Hormuz; a route that is of vital importance for exporting energy from the Persian Gulf region. Tensions between the United States and Iran over control of this strait have intensified in recent days.

The U.S. Army said that in response to Tehran’s attacks on an American warship, it targeted five Iranian oil tankers and sank one of them.

The Islamic Revolutionary Guard Corps (IRGC) has also claimed that in response, it carried out heavy missile attacks against Jordan, the United States’ ally. Jordan’s official news agency, Petra, reported, citing the country’s army, that 20 ballistic missiles were intercepted.

Europe’s gas market is most concerned that LNG exports from the fields and facilities in the Persian Gulf region may be disrupted for a long time.

At present, there is no clear outlook for a sustainable reopening of the Strait of Hormuz, and market hopes for finding a solution through negotiations have declined.

Gas prices have been on an upward trend since early July. At that time, gas was trading at a little over 40 euros per megawatt-hour.