Gas Price Soars in Europe Amid Rising Tensions Between Iran and Israel

Geopolitical Dynamics and their Impact on Gas Prices in Europe

It’s not just oil: gas prices are also proving to be vulnerable to the geopolitical dynamics of the Middle East.
The Dutch benchmark, a reference for European pricing, is on the rise due to the ongoing tensions between Iran and Israel and their unpredictable consequences.
Specifically, the price of gas has surpassed 33 euros per megawatt-hour on the morning of Tuesday, April 16.

European Gas Prices Surge Amidst Iran-Israel Effect

European natural gas prices are increasing due to concerns about supply disruptions amidst growing hostilities in the Middle East.
The Dutch TTF is up 6% at 33.165 euros per megawatt-hour, the highest level since January.
“The threat of tanker disruptions for LNG passing through the Strait of Hormuz has led buyers to quickly secure spot cargoes,” ANZ Research analysts noted.

It is worth noting that Qatar, the world’s largest LNG exporter, sends nearly all of its LNG through the Strait.
Approximately 80 million tons, or 20% of global LNG flows, pass through the strait every year, according to Vortexa.
In the event of further Israeli retaliation to Tehran’s missile strikes on Saturday night, Iran could decide to use control over the strategic passage as retaliation.

Unplanned Outages and Market Influences

Meanwhile, an unplanned outage at Norway’s Nyhamna gas treatment plant is disrupting flows to the rest of Europe, providing further support to prices.
At the same time, LNG imports from Asian countries are on the rise, with purchases from China reaching 6.61 million tons in March.

Recent gains have also been driven by persistent attacks on energy infrastructure in Russia and Ukraine.
Europe relies on Ukrainian storage sites, but in this new phase of the conflict, facilities producing and containing energy resources are targeted to unlock a phase of war-related difficulties.

Despite this, European gas markets are well supplied, with reserves currently at 61.7% of capacity.
Factors such as forecasts for warmer weather, increased wind energy production, strong French nuclear energy production, and growing Norwegian gas supply are exerting a bearish influence on the market.