The price of October natural gas futures contracts on the TTF rose 5.6% to €83.96 per megawatt-hour as of 9:59 a.m. today, after closing at €79.52 on Friday. Developments threatening energy supplies in the Middle East affected price movements in Europe.
Supply security concerns intensify
Saudi Arabia’s temporary shutdown of the strategically important East-West Oil Pipeline following drone attacks played a role in the price increase. The Houthis’ advance in Yemen also heightened concerns that further disruptions to global energy supplies could occur.
A meeting on the possibility of establishing a temporary safe route in the Strait of Hormuz between Iran and the Gulf countries was scheduled to take place today, but it was postponed. Iranian Foreign Ministry spokesperson Esmaeil Baghaei had previously announced that a meeting would be held in Oman for this purpose. Bahrain said it would not participate in any meeting attended by Iran.
EU storage facilities reach 68.04% capacity
European countries continue to fill 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 Gas Infrastructure Europe data, natural gas storage facilities in European Union countries are 68.04% full. The European Commission also announced on September 8 that there was no immediate risk to natural gas supply security this winter.
Prolonged disruptions to LNG supplies from the Gulf countries could further tighten the global natural gas market. In that case, European buyers could face more intense competition from consumers in Asia for LNG cargoes, increasing upward pressure on prices.
Economic impact of high prices
Citigroup strategists say that Europe’s economy and equity markets have been less affected by rising natural gas prices than during the 2022 energy crisis.
However, persistently high natural gas prices could increase pressure on the profits of companies operating in energy-intensive sectors and on the economic outlook.
