European gas prices surge over Iran tensions

Dutch and British wholesale gas prices rose by more than 25 per cent on Monday morning after attacks between Iran and Israel intensified and several energy supplies through the Strait of Hormuz were suspended. Most tanker owners, oil companies and trading houses have halted the transport of oil, fuels and liquefied natural gas (LNG) along this route following Tehran's warning.

Around 20 per cent of global LNG shipments pass through the Strait of Hormuz. Europe has increased its LNG imports since Russia invaded Ukraine to replace Russian gas gradually.

According to SEB analyst Ole Hvalbye, eight to ten per cent of European LNG imports are indirectly linked to flows through Hormuz. In the event of a disruption, Asian buyers would increase demand for US LNG, which would limit supply to Europe and push prices higher.

The Dutch monthly contract at the TTF hub rose by almost €8 to €39.96 per MWh by 9.42 a.m. Analysts at Rabobank warned that even a partial disruption of supplies could push the TTF price to €50 per MWh. European gas storage facilities are around 30 per cent full. The price of emission allowances fell to €69.80 per ton.

(reuters, max)