Developments affecting energy supplies in the Middle East sent European natural gas markets higher at the start of the week. On the Netherlands-based TTF, the price of October contracts rose 5.6% from Friday’s close of €79.52 to €83.96 as of 9:59 a.m. today.
Developments along the Gulf route intensify supply concerns
Saudi Arabia’s temporary closure of the strategically important East-West Oil Pipeline following attacks carried out with unmanned aerial vehicles contributed to the price increase. The Houthis’ advance in Yemen also heightened concerns that further disruptions to global energy supplies could occur.
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 for this purpose. Bahrain said it would not attend any meeting involving Iran.
European storage facilities 68.04% full
While European countries continue filling their natural gas storage facilities ahead of winter, disruptions to LNG shipments sent to Europe from the Persian Gulf, particularly from Qatar, are increasing pressure on the region’s supply outlook.
According to data from Gas Infrastructure Europe, natural gas storage facilities in European Union countries are 68.04% full. The European Commission announced on September 8 that there was no immediate risk to natural gas supply security for this winter.
Prolonged disruptions to LNG supplies from the Gulf countries could further tighten global natural gas markets. In that case, European buyers are expected to compete more intensely with consumers in Asia for LNG cargoes, increasing upward pressure on prices.
Economic impact of high prices being monitored
Citigroup strategists say the European economy and stock markets have been less affected by rising natural gas prices than during the energy crisis in 2022.
Nevertheless, persistently high natural gas prices could increase pressure on the profits of companies operating in energy-intensive sectors and on the economic outlook.
