European natural gas prices rose amid developments in the Middle East threatening energy supplies. On the Netherlands-based TTF, the megawatt-hour price of October contracts rose 5.6% to 83.96 euros as of 09:59 today, after closing at 79.52 euros on Friday.
Concerns over energy supplies intensify
The increase was driven by Saudi Arabia’s temporary closure of the strategically important East-West Petroleum Pipeline following drone attacks. The advance of the Houthis in Yemen also heightened concerns about possible new disruptions to global energy supplies.
A meeting planned for today to discuss a possible agreement on establishing a temporary safe route in the Strait of Hormuz between Iran and the Gulf countries was postponed.
Iranian Foreign Ministry spokesperson Ismail Baghaei had announced that a meeting would be held in Oman to establish a temporary safe route in the Strait of Hormuz. Bahrain said it would not attend any meeting involving Iran.
European storage facilities are 68.04% full
Europe’s efforts to fill its natural gas storage facilities ahead of winter are continuing. 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, the fill rate of natural gas storage facilities in European Union countries stands at 68.04%. The European Commission said on September 8 that there was no immediate risk to natural gas supply security this winter.
If disruptions to LNG supplies from the Gulf countries persist, the global natural gas market could tighten further. In such a scenario, European buyers are expected to compete more intensely with consumers in Asia for LNG cargoes, increasing upward pressure on prices.
Economic effects being monitored
Citigroup strategists say the European economy and equity markets have been affected less severely by rising natural gas prices than during the energy crisis in 2022. However, if natural gas prices remain persistently high, pressure on corporate profits and the economic outlook could increase, particularly in energy-intensive sectors.
