European gas prices test €83 amid Middle East tensions

European natural gas prices rose above €83 per megawatt-hour (MWh) on Monday as escalating tensions in the Middle East raised concerns over LNG supplies to global markets.

The front-month October contract at the Dutch TTF hub, the benchmark for European gas prices, settled at €79.52 per MWh on Friday.

The contract was trading at €83.96 per MWh as of 9.59 a.m. local time (0659 GMT) on Monday, up 5.6% from Friday’s close.

The rise came as developments in the Middle East increased concerns over potential disruptions to global energy supplies.

Saudi Arabia temporarily shut its East-West oil pipeline following drone attacks, while advances by Yemen’s Houthis raised concerns over further disruptions to regional energy infrastructure and shipping.

Meanwhile, Oman announced the postponement of a regional meeting scheduled for Monday in its southern city of Salalah to discuss arrangements for a new maritime route through the Strait of Hormuz.

Iranian Foreign Ministry spokesman Esmaeil Baqaei said Friday that Tehran would organize the meeting, hosted by Oman, at the foreign minister level and with the participation of eight countries bordering the Gulf.

The Omani Foreign Ministry said late Sunday that the meeting had been postponed to a later date “to help create appropriate conditions for constructive dialogue.”

The Bahraini Foreign Ministry said Saturday they will not participate in any collective ministerial meeting with Iran before diplomatic relations between the two countries were restored.

– Europe refills gas storage ahead of winter

Europe is continuing to refill its gas storage facilities ahead of winter, while disruptions to LNG shipments from the Persian Gulf, particularly from Qatar, are weighing on the region’s supply outlook.

Gas storage facilities in European Union countries were 68.04% full, according to data from Gas Infrastructure Europe (GIE).

The European Commission said on Sept. 8 that there was no immediate risk to gas security this winter, but prolonged disruptions to LNG supplies from Gulf countries could tighten the global gas market further.

European buyers could then face stronger competition from Asian consumers for LNG cargoes, putting further upward pressure on prices.

Strategists at US-based financial services firm Citigroup (Citi) said the European economy and equity markets have been less affected by higher gas prices than during the 2022 energy crisis.

However, persistently high gas prices could put further pressure on corporate profits, particularly in energy-intensive sectors, and weigh on the economic outlook, Citi said.

• Gas Infrastructure Europe (GIE)
• Gas storage facilities in European Union countries
• higher gas prices
• Middle East raised concerns over LNG supplies to global markets.