Gas prices for the European market rise, with Middle East tensions contributing

The wholesale price of gas for the European market is rising sharply today, driven by the threat of strikes in Australia, the prospect of colder weather and concerns about tensions in the Middle East. Shortly before 14:30 CEST, the price of the key front-month gas futures contract at the Title Transfer Facility (TTF) virtual trading hub in the Netherlands was up by around 11 percent, trading near 42.5 euros (roughly CZK 1040) per megawatt-hour (MWh).

Employees at two Australian liquefied natural gas (LNG) plants operated by Chevron voted last week to resume strikes. The unions accused the company of breaching an agreement that ended the strikes last month.

“Renewed concerns about Australian LNG are pushing prices higher. However, we believe the price rise is only temporary and that prices remain within the market’s current range of fluctuation,” analysts at Engie EnergyScan said, according to Reuters.

The clashes between Israel and the Palestinian Islamist movement Hamas have stoked market concerns about a wider conflict in the Middle East. Hamas launched its largest military attack on Israel in a decade on Saturday. Hundreds of Israelis were killed, and the attack triggered a wave of retaliatory Israeli airstrikes on the Gaza Strip.

Gas prices were also pushed higher by a report over the weekend that the subsea gas pipeline connecting Finland and Estonia had been taken out of service because of an unusual drop in pressure. If a suspected gas leak is confirmed, repairs could take several months, Finnish gas system operator Gasgrid said.

In August last year, the wholesale price of gas for the European market climbed to nearly 350 euros per megawatt-hour as Russian supplies were curtailed. It has fallen sharply since then, helped by high LNG deliveries. The exchange price of gas is now well below the administratively set cap in the Czech Republic, which stands at CZK 2500 per MWh.