Iran war: gas prices rise to their highest level since the end of 2022

The gas storage facilities in Europe are significantly emptier than the average in recent years. In addition, Europe is in competition with Asia for LNG supplies. There is no relaxation in sight.

Dusseldorf. The price of natural gas in Europe is currently as high as it was last at the end of 2022. The landmark natural gas futures contract TTF for delivery in one month was at 85.95 euros per megawatt hour on the Amsterdam stock exchange on Tuesday.

The prices are driven by the low storage levels. The storage facilities in Europe are around 74 percent full, well below the average of around 89 percent over the past five years. In Germany the filling level is only 60 percent.

Typically, storage gas covers 25 to 30 percent of the EU's winter gas consumption, making the EU highly dependent on pipeline supplies and liquefied natural gas (LNG), particularly from Norway and the US. Any supply disruption could lead to further price jumps, while ongoing competition from Asia for LNG supplies is likely to keep prices high.

LNG tanker transits through the Strait of Hormuz have recently risen to their highest level since the start of the Iran War. “However, the September level still only corresponds to around 20 percent of the number of LNG tankers that passed through the Strait of Hormuz before the Iran war,” Commerzbank experts wrote last week. However, the transit times are relatively small compared to crude oil.

The de facto blockage of the Strait of Hormuz for the delivery of energy raw materials such as liquefied natural gas from the production areas in the Persian Gulf had driven up the price of European natural gas significantly since the beginning of the war. In addition, important production and conversion facilities were destroyed in Qatar, one of the most important export countries. At the end of February the gas price was still around 30 euros.