Gas prices in Europe jump sharply as Middle East war disrupts supply
Photo: Conflict around Iran is reshaping Europe’s gas market (Getty Images)
Natural gas prices in Europe continue to surge sharply amid the conflict in the Middle East. The rise is driven both by infrastructure damage and significantly complicated logistics, according to Bloomberg.
On March 9, gas futures jumped by as much as 30%, extending their biggest weekly increase since the energy crisis.
This surge followed oil prices climbing to over $100 per barrel, as several major Middle Eastern producers reduced output and the Strait of Hormuz effectively remained closed.
US natural gas futures also rose, reaching their highest level in a month.
The conflict between the United States and Iran shows no signs of easing, creating more uncertainty in energy markets and increasing inflationary pressure. In particular, Europe will likely have to buy more liquefied natural gas (LNG) to refill storage after winter, competing with buyers in Asia.
“The market is slowly waking up to the reality of prolonged supply disruptions across the whole energy value chain. We see supply disruptions to last for about three months now,” said Florence Schmit, energy strategist at Rabobank.
According to analysts, gas prices remain far below the record levels reached during the energy crisis. Currently, they stand at about 64 euros per megawatt-hour, compared with the historic peak of more than 300 euros per megawatt-hour.
Nevertheless, the impact of the conflict could reshape the dynamics of the global gas market. A halt in LNG production in Qatar would likely eliminate much of the surplus some analysts expected this year. Moreover, any disruptions to LNG supplies from Qatar could quickly lead to a shortage.
A new energy crisis in Europe?
Earlier, Norwegian Energy Minister Terje Aasland said that the war in Iran could affect Europe’s energy stability and reignite discussions in the EU about a full ban on Russian natural gas.
This could mean that Europe might once again begin purchasing Russian gas more actively, even though EU countries recently approved a complete ban on Russian gas imports by the end of 2027.
It was also reported that Britain has only two days of natural gas reserves, as the Middle East conflict led to the shutdown of the world’s largest gas facility.
