European gas prices soar to four-year high over winter supply fears

European gas prices have jumped to levels not seen since 2022 as fears continue to grow around the continent’s supply this winter and ongoing conflict in the Middle East.

Wholesale gas prices hit €97 (£81) per megawatt-hour on Monday, as temperatures across Europe fell and traders priced in stronger demand for heating.

The UK’s month ahead contract also rose by 4% to 240p per therm, its highest level since December 2022 when prices were rocketing in the wake of Russia’s full-scale invasion of Ukraine.

The jump in gas prices comes as fears grow that there could be further supply disruptions in the Middle East, amid reports that the US and Israel have drawn up plans for renewed strikes against Iran after the US midterm elections.

Those reports helped send the oil price as high as $117 a barrel on Friday. The international Brent crude benchmark retreated about 2% on Monday but remains over $114 (£85) a barrel.

Europe is also facing a shortage of stored gas reserves as it heads into winter with stores at their lowest level in more than a decade owing to a slowdown in exports from Qatar and an increase in consumption in the summer to power refrigeration and cooling. European storage is now about 75% full, against a seasonal average closer to 80%.

Britain’s energy regulators have warned that the country is expected to pay some of the highest energy costs in Europe this winter amid a reliance on imports to ensure a steady supply. The UK has some of the smallest gas stores across the continent after decades of relying on homegrown production from the North Sea.

The UK paid a record £4bn on power imports over the year ending in August, according to figures from the Office for National Statistics, of which half was spent on electricity imported from France.

It has also made near-record payments over the past year to fire up gas plants while wind and solar farms have been paid to turn off due to bottlenecks in the grid.

Meanwhile British households face growing energy bills, which are predicted to rise 16% in January to reach the equivalent of about £2,000 for the typical annual billl.

European stock markets rose slightly on Monday on the weaker oil price, with the Stoxx Europe 600 – which tracks the biggest companies on the continent – up by 0.3% in early trading on Monday. The UK’s blue chip FTSE 100 rose by 0.4%.