European gas prices soar amid Middle East tensions

Gas futures contracts in Europe jumped by up to 36 per cent to nearly €58 per megawatt hour, the highest since January 2023. Later, they gave up some of their gains and traded at around €54 per MWh, according to Trading Economics.

The rise followed a nearly 35 per cent increase in the previous session. Markets are reacting to escalating tensions in the Middle East and worries over disruptions to liquefied natural gas (LNG) supplies to Europe.

QatarEnergy halted LNG production on Monday after Iranian drones struck the Ras Laffan and Mesaieed facilities. These sites account for about one-fifth of global LNG production. The outage could affect around 15 per cent of LNG imports to Europe, further tightening global supply and increasing competition for alternative sources.

The situation is made worse by Iran’s decision to restrict shipping in the Strait of Hormuz, a key route for energy exports from the region. The risks come at a time when gas storage facilities in the EU are only 31 per cent full, compared with roughly 40 per cent at the same time last year.

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