Gas Prices in Europe Surge Again at the Start of the Week

Gas prices in Europe surged again on Monday, reaching the highest level since January 2023, following Russia’s decision to redirect liquefied gas from European markets to Asia ahead of the import ban in the European Union.

The megawatt-hour of gas for delivery in April was priced at 62.51 euros on the Dutch digital exchange TTF in the morning, approximately 17 percent higher than at the close of trading at the end of last week. At the very beginning of today’s trading, its price had jumped to 68.63 euros.

Compared to the last trading day in February, before the US-Israeli attack on Iran, gas prices are currently nearly double, reaching the highest level since January 2023.

Prices surged following the Israeli-American attack on Iran on February 28. Tehran responded by firing missiles at Israel and American bases in several countries along the Persian Gulf, including the United Arab Emirates, Kuwait, and Qatar, the world’s leading exporter of liquefied gas.

The Iranian military has since taken control of the Strait of Hormuz, banning the passage of vessels associated with the US, Israel, and European countries.

On Wednesday, the gas giant QatarEnergy informed customers via a ‘force majeure’ announcement that it would not be able to deliver liquefied gas under the agreed terms. The Qatari Ministry of Defense reported a few hours later about the incursion of two drones launched from Iran, adding that their targets were a water tank at a power plant in Mesaieed and an energy facility owned by QatarEnergy in Ras Laffan.

Qatar produces about one-fifth of the world’s liquefied gas and ranks second among the world’s leading exporters, behind the US.

The European Union has suspended imports of Russian gas via pipelines and plans to halt LNG procurement as well. Currently, gas is mainly sourced from the US, Norway, and Qatar.

On Friday, the Russian government announced that it would redirect some shipments of liquefied natural gas (LNG) intended for European markets to customers in Asia before the announced import ban on Russian gas takes effect in the European Union.

– We have decided that part of the LNG we are currently supplying to Europe will be redirected to other markets that are building constructive, pragmatic relations with our country, signal demand, and offer opportunities for long-term contracts – said Deputy Prime Minister Aleksandr Novak on Friday, according to a report by the Russian news agency Interfax.

Russian suppliers could sign new contracts with companies from, for example, China, India, the Philippines, and Thailand, the agency quoted the words of the Russian Deputy Prime Minister.

Market forecasts for the Asia-Pacific region signal long-term demand growth, Novak emphasized, and the economy in that region is growing stronger than the global average.

The redirection of liquefied gas shipments from Europe to Asia also hints at a change in the shipping direction of two tankers carrying American LNG and one carrying Nigerian LNG, Reuters reported on Friday, citing data from the analytical firm Kpler and LSEG.