Natural Gas Prices Rise in Europe Due to US-Iran Tension

The megawatt-hour price of natural gas closed at 71.95 euros on Friday in October futures contracts traded at TTF, the Netherlands-based virtual natural gas trading point with the greatest depth in Europe.

The megawatt-hour price of natural gas increased by 3.3 percent to 74.35 euros as of 10.42 today compared to the previous closing.

Concerns that the escalation of tension between the USA and Iran could further disrupt the energy supply from the Persian Gulf were effective in the rise in prices.

Secretary General of Iran's Supreme National Security Council, Mohsen Rezai, announced that the agreement to establish a new corridor in the Oman Sea and the Strait of Hormuz, the entry and exit points of which will be under Iran's control, will be signed in the coming days.

Rezai said that the area in question would start from the area where the USA imposed a naval blockade and include the Strait of Hormuz and the Persian Gulf, and warned that any ship entering the new area to be declared "without permission" would be blacklisted by Iran.

This statement came after the US attacks on Iranian oil tankers. The US army announced that it destroyed 3 tankers belonging to the Revolutionary Guard on Saturday after Iran targeted 2 US warships in the region.

The ongoing escalation with mutual attacks supports the upward movement of natural gas prices by increasing concerns that LNG shipments from the region may be further delayed.

STORAGE LEVELS BELOW SEASONAL AVERAGE

According to Gas Infrastructure Europe (GIE) data, the occupancy rate of natural gas tanks in the European Union countries is at 66.6 percent.

As Europe approaches the end of the summer natural gas storage injection process, the occupancy rate in tanks is currently below the seasonal average.

The EU made it mandatory to fill natural gas tanks to 90 percent by November 1 in response to the energy crisis following the Russia-Ukraine War.

The Union changed its storage rules last year, providing member countries with flexibility in targeting in difficult market conditions. The 90 percent target was allowed to be achieved between October 1 and December 1, and warehouses were allowed to be filled at 80 percent under some conditions.

Analysts state that if the current pace is maintained, the tanks can reach 70-75 percent occupancy at the beginning of the heating season, but the main problem in the coming period will be the supply of gas at prices much higher than its availability.