Natural gas price reaches highest level since the start of the Iran war

The price of natural gas has risen to its highest level since the early stages of the Iran War. The landmark natural gas futures contract TTF for delivery in one month was traded on the Amsterdam Stock Exchange at 64.60 euros per megawatt hour (MWh). This is the highest level since mid-March. The Iran war began at the end of February and temporarily drove the price of gas up to around 70 euros in March. Before the war the price was around 30 euros.

The price of gas has been trending upwards for two weeks. During this time, the raw material has become more expensive by more than 20 percent. There is increasing concern on the market that a normalization of deliveries of energy raw materials from the producing areas in the Persian Gulf is not possible for the time being. Iran is demanding the implementation of a framework agreement with the USA signed in mid-June to open the Strait of Hormuz.

The increase in the price of natural gas is affecting fill levels in European gas storage facilities that are significantly below the previous year's level. According to the latest data from the European Association of Gas Infrastructure Operators (GIE), the filling level was 61.37 percent on August 17. A year ago the filling level was almost 74 percent.

The industry association Association of Gas Transmission System Operators (FNB-Gas) wrote in a recent press release that the statutory storage target will hardly be achievable by November 1, 2026, "even with storage of up to 1.2 TWh per day - the highest value ever observed in the market." Currently, storage is significantly lower.

Germany's storage facilities fill up slowly for the winter because gas is expensive. The companies are speculating on government support, and Minister Reiche is being persistent. Is she gambling away?