European natural gas prices rose sharply on Monday, extending gains for a fourth consecutive session as supply disruptions linked to the conflict in the Middle East and relatively low European storage levels continued to influence energy markets.
The benchmark Dutch TTF front-month natural gas contract increased 3.6% to €97.19 per megawatt-hour (MWh), reaching its highest level in nearly four years.
In the United Kingdom, NBP natural gas futures advanced 3.7% to 239.33 pence per therm, also reaching levels last recorded in 2022.
The increases followed a week of rising wholesale energy prices, during which Dutch gas futures gained nearly 7% and their British counterparts advanced more than 6%.
Market participants are monitoring disruptions to liquefied natural gas (LNG) shipments from the Middle East, competition for alternative supplies and the level of gas held in European storage facilities ahead of the winter heating season.
Dutch TTF and UK Gas Futures Extend Weekly Gains
European wholesale gas benchmarks continued their recent increases during Monday’s trading session.
The Dutch TTF front-month contract, widely used as a reference price for European natural gas, rose 3.6% to €97.19/MWh.
The price represented its highest level since 2022, following a gain of almost 7% during the previous week.
British NBP natural gas futures increased 3.7% to 239.33 pence per therm, extending the previous week’s advance of more than 6%.
The simultaneous increases reflected concerns about the availability and cost of natural gas supplies across European markets.
Wholesale gas prices are influenced by several factors, including LNG imports, pipeline deliveries, storage inventories, weather conditions and demand from electricity generators and industrial consumers.
The latest price movements occurred as traders assessed the potential duration of disruptions to energy shipments from the Persian Gulf.
Strait of Hormuz Disruptions Affect LNG Supply Routes
Developments in the Middle East remain a central factor in the European gas market.
The latest price increases followed an escalation in regional hostilities, including reported Houthi drone and missile attacks on Saudi Arabian transport and energy facilities in Dammam and Shaybah.
The attacks contributed to concerns about the security of energy infrastructure and shipping routes.
Maritime disruptions affecting the Strait of Hormuz have also restricted tanker movements through a major international energy transport corridor.
The waterway is an important route for oil and LNG shipments originating in the Persian Gulf.
Restrictions on shipping operations can affect delivery schedules, transportation costs and the availability of cargoes for international buyers.
According to the market information cited, Middle Eastern LNG deliveries to Europe remain approximately 80% below their levels a year earlier.
The reduction has been attributed to shipping disruptions and the rerouting of vessels around the Cape of Good Hope.
Longer shipping routes increase transit times and can reduce the number of deliveries completed by individual vessels over a given period.
These developments have added to concerns about Europe’s ability to secure sufficient LNG supplies ahead of peak winter demand.
Diplomatic Discussions Continue Amid Regional Tensions
Reports over the weekend indicated that Qatari mediators had travelled to Tehran to coordinate with Washington on possible measures to reduce tensions in the region.
The diplomatic activity followed the recent escalation in attacks affecting energy and transport infrastructure.
However, the reported discussions have not yet resulted in a confirmed agreement to restore normal shipping conditions.
Iranian officials have indicated that certain concessions would be required before formal negotiations could proceed.
Energy markets therefore continue to assess the possibility of prolonged disruption to maritime operations and LNG deliveries.
The timing and outcome of diplomatic discussions remain uncertain, as do the potential implications for international energy transportation.
European Gas Storage Falls to 74.6% Capacity
Supply concerns have been compounded by the level of natural gas held in European storage facilities.
European Union underground gas storage sites are approximately 74.6% full, according to the figures cited.
This represents the lowest storage level recorded for late October since 2009.
Gas storage provides an important source of supply during winter, when heating demand typically increases and consumption can exceed current import and production flows.
Lower inventories reduce the volume of stored gas available to meet unexpected increases in demand or interruptions to external supplies.
Seasonal temperatures have begun to decline, and some European countries have reportedly started withdrawing gas from underground storage facilities.
These withdrawals come as the region approaches the period of highest seasonal heating demand.
The combination of lower storage levels and uncertainty over LNG deliveries has increased attention on Europe’s supply position during the coming months.
European Buyers Compete With Asia for LNG Cargoes
European energy companies are also competing with Asian importers for available LNG shipments.
The competition is particularly relevant for cargoes from the Atlantic Basin that have not already been committed under long-term supply agreements.
When demand increases across several importing regions, buyers may need to offer higher prices to secure available shipments.
The availability of LNG cargoes also depends on production capacity, shipping schedules and contractual commitments.
Disruptions to Middle Eastern exports can increase demand for supplies from alternative producing regions.
For European utilities, these conditions affect procurement costs and the availability of gas for storage replenishment and consumption.
The extent of the price impact will depend on future LNG supply flows, weather-related demand and developments affecting shipping routes.
Higher Gas Prices Add to European Inflation Considerations
The increase in European natural gas prices comes alongside elevated international crude oil prices, adding to the energy-related factors being monitored by central banks.
Higher wholesale gas prices can affect electricity generation costs, industrial production expenses and household energy bills.
The extent and timing of the impact on consumer inflation depend on national pricing arrangements, energy contracts, government measures and the duration of wholesale price increases.
The European Central Bank and the Bank of England are expected to maintain their current policy rates at their forthcoming meetings, according to the market expectations cited.
However, money markets are also pricing in the possibility of subsequent 25-basis-point interest rate increases before the end of the year.
Those expectations reflect concerns that higher energy costs could contribute to broader inflationary pressures.
Central banks will assess energy price developments alongside economic growth, wage trends and other inflation indicators when determining monetary policy.
Winter Supply Outlook Remains a Focus for European Gas Markets
European gas prices have reached their highest levels since 2022 as traders evaluate supply disruptions in the Middle East and relatively low inventories ahead of winter.
The Dutch TTF contract’s rise to €97.19/MWh and the increase in British NBP futures to 239.33 pence per therm reflect the latest movements in wholesale energy markets.
The reported reduction in Middle Eastern LNG deliveries, disruptions affecting the Strait of Hormuz and EU storage levels of 74.6% remain relevant to the supply outlook.
Future price movements will depend on developments in regional diplomacy, shipping conditions, alternative LNG availability and winter demand.
Investors and energy market participants will also be monitoring the potential effects of sustained wholesale energy prices on European inflation and monetary policy expectations.
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