Gas Prices in Europe Approach Four-Year High

Gas prices in Europe approached a four-year high amid disruptions to gas transit through the Strait of Hormuz and forecasts of cold weather.

Natural gas prices in Europe reached their highest level in nearly four years on Tuesday.

According to Ambassador Arjan, the tension between Donald Trump, the President of the United States, and Volodymyr Zelensky, the President of Ukraine, over Russian diesel, has disturbed the markets in a situation where parts of Central Europe are expected to face colder weather in the next two weeks.

The price of natural gas future contracts in the Dutch market, which is the main indicator of gas prices in Europe, increased for the sixth consecutive day by reaching 87.20 euros per megawatt hour.

This is the highest price level since before the start of the US-Israeli war against Iran in late February. The price of gas in Europe before the war was about 32 euros per megawatt hour.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, said the low level of gas reserves at the start of the winter demand season has left Europe vulnerable to price spikes.

He warned that even a slight decrease in temperature was enough to increase prices and this issue shows the possible difficulties of the upcoming winter.

According to this report, European gas prices have increased significantly since the start of the war with Iran and have reached levels that have not been seen since the consequences of Russia's attack on Ukraine in 2022.

Conflicts in the Middle East have disrupted the flow of cargo through the Strait of Hormuz; The passage through which about one-fifth of the world's liquefied natural gas (LNG) passes under normal conditions.

On Sunday, Trump wrote on the social network Truth Social that Russia and Ukraine have agreed on an "energy ceasefire".

These statements were made two days after he announced an agreement with Vladimir Putin to import Russian diesel. However, Zelensky announced on Monday that Ukrainian attacks on Russian oil refineries will continue.

The decrease in temperature, especially in Central Europe, is expected to increase the demand for gas for home heating during this month.

At the same time, the decrease in wind speed is expected to limit the production of electricity from wind turbines and increase the need for other energy sources.

Europe's gas reserves are now less than 74% of reservoir capacity; While this rate is usually around 90% at this time of the year.

Meanwhile, European winter has started on October 1. The concern of the competition of Europe and Asia, as the two largest regions importing LNG gas, to provide the cargoes needed in winter has also fueled the increase in prices.