Natural gas prices in Europe reached €86.50 per megawatt-hour, the highest level since the start of the war between the United States and the Israeli regime against Iran in late February 2022. This price increase is due to a decrease in gas reserves, predictions of colder weather, and escalating political tensions regarding Russian diesel exports.
Gas price increase compared to last year
The futures price of natural gas in the Netherlands, which is recognized as the main gas price index in Europe, has increased for the sixth consecutive day and has risen about 170% compared to the €32 level before the war. This trend has pushed prices to the highest level since the energy crisis caused by the Ukraine war in 2022.
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Factors of instability in the energy market
Disputes between former U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky regarding the agreement on Russian diesel exports have also been cited as one of the factors of instability in the energy market. Additionally, the forecast of lower temperatures in Central Europe over the next two weeks has heightened concerns about increased gas demand.
Olli Hansen, head of commodity strategy at Saxo Bank, warned about low gas reserves at the beginning of the winter demand season, stating that even a slight drop in temperature would be sufficient to raise prices. The filling level of gas storage facilities in Europe is now less than 74%, while this figure should normally be around 90%.
The heating season began on October 1, and the forecast of colder than usual weather in Central Europe is increasing the demand for gas for home heating. It is also expected that a decrease in wind speed will limit electricity generation from wind turbines and put further pressure on the European energy market.
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