October futures on the Netherlands-based TTF, considered Europe’s benchmark natural gas market, rose 5.6% from Friday’s close of €79.52 to €83.96 per megawatt-hour as of 09:59 today.
Price movements were driven by developments that could affect energy supplies in the Middle East, as well as the security situation around the Strait of Hormuz. Saudi Arabia temporarily shut down the strategically important East-West Oil Pipeline following drone attacks. The advance of the Houthis in Yemen also increased concerns that further disruptions to global energy supplies could occur.
Strait of Hormuz talks postponed
A meeting planned for today to discuss a possible agreement between Iran and the Gulf states on establishing a temporary safe route through the Strait of Hormuz was postponed.
Iranian Foreign Ministry Spokesperson Esmaeil Baghaei had announced that a meeting would be held in Oman to establish a temporary safe route through the Strait of Hormuz. Bahrain said it would not attend any meeting in which Iran participated.
European gas storage facilities are 68.04% full
European countries continue to fill their storage facilities ahead of winter, while disruptions to LNG shipments from the Persian Gulf, particularly from Qatar, are increasing pressure on the region’s supply outlook.
According to data from Gas Infrastructure Europe, gas storage facilities in European Union countries are 68.04% full. The European Commission said on September 8 that there was no immediate risk to the security of natural gas supplies this winter.
A prolonged disruption to LNG supplies from the Gulf states could further tighten the global natural gas market. In that case, European buyers could face more intense competition from consumers in Asia for LNG cargoes, which could increase upward pressure on prices.
High prices could pressure energy-intensive sectors
Citigroup strategists say the European economy and equity markets have been less affected by rising natural gas prices than during the 2022 energy crisis.
However, persistently high natural gas prices could increase pressure on the profits of companies operating in energy-intensive sectors and on the economic outlook.
