European gas prices nearly triple as Hormuz Strait blockade spooks market

The wholesale price of natural gas for the European market rose to its highest level since late 2022 this morning. The October delivery futures contract at the Title Transfer Facility (TTF) virtual trading hub in the Netherlands exceeded EUR 84 (around CZK 2,040) per megawatt-hour (MWh). It later gave back some of its gains, falling below that threshold. At around 11:50 CEST, it was up five percent, trading at EUR 83.90. The price increase is a result of supply disruptions from the Middle East.

Investors are concerned about a prolonged disruption to liquefied natural gas supplies from the Middle East due to the blockade of the Strait of Hormuz. A meeting between Iran and several Persian Gulf states, originally scheduled for today to discuss the situation in the strait, which is crucial for the transport of energy commodities, has been postponed.

Gas prices in Europe have already nearly tripled this year, news agency DPA noted. The conflict in the Middle East and the related restrictions on energy commodity supplies have so far shown no signs of ending. European countries are also under pressure to replenish low gas storage levels before winter arrives.

Experts expect that if global supplies remain tight, competition for resources could intensify during the heating season. According to a Bloomberg analysis, the volume of liquefied natural gas (LNG) deliveries to Western Europe increased at the beginning of September. However, it fell again last week, coinciding with a slowdown in the pace of gas storage refilling.