Gas in Europe breaks records. Low stocks and conflict push prices above €90

The wholesale price of gas for the European market today exceeded €90 (around CZK 2,200) per megawatt-hour (MWh) for the first time in almost four years. The increase is being driven by continued disruptions to supplies from the Middle East. The price of gas for the European market has already roughly tripled compared with the period before the war with Iran began, Bloomberg reported.

The price of the key front-month gas futures contract at the Title Transfer Facility (TTF), a virtual trading hub in the Netherlands, climbed to around €90.2 per MWh early this afternoon, its highest level since December 2022. It later fell, however. Shortly before 4 p.m. CEST, it was down about one percent from Monday, trading near €87 per MWh.

The conflict in the Middle East, which began in late February with US-Israeli attacks on Iran, has brought shipping through the strategically important Strait of Hormuz to a standstill. Around a fifth of the world's liquefied natural gas (LNG) supplies normally pass through it.

European gas buyers will likely have to pay higher prices this winter to secure sufficient supplies amid competition from Asia. The situation is further complicated by relatively low gas stocks in Europe, particularly in Germany, Bloomberg reported.

According to data from Gas Infrastructure Europe (GIE), gas storage facilities in the European Union were just under 75 percent full on Monday. In Germany, Europe's largest gas consumer, storage levels stood at around 61 percent, while in the Czech Republic they were around 77 percent.

Comments made by analysts to the Czech News Agency (ČTK) late last month suggest that a prolonged and severe cold spell could push gas prices in Europe up by as much as tens of percent. “There isn't enough gas in Europe for us to ignore the prospect of a harsh winter. If several weeks of severe frost hit Germany, Czechia and other countries at the same time, Europe would compete fiercely for every additional supply. And price would be the main tool in that competition,” said, for example, Martin Pacovský, investment director at the Arete Energy fund.