European gas prices surge
Natural gas prices in Western Europe rose more than 8% on Wednesday, according to data from the London Intercontinental Exchange (ICE).
The cost of gas futures for July delivery at the Title Transfer Facility (TTF) hub in the Netherlands saw an increase by 8.4% to $429.8 per thousand cubic meters, or €37.055 per megawatt-hour in household terms.
The surge has occurred amid rising tensions in the Middle East, a crucial energy supplier and an essential oil shipping passageway. In particular, the escalating conflict between Israel and Gaza that could spread to the whole region.
Meanwhile, the latest airstrikes carried out by US forces on Kataib Hezbollah militants in Iraq, along with renewed assaults by Houthi militants on shipping routes in the Red Sea, have exacerbated concerns about the stability of the entire region.
Vessels traveling to the Mediterranean via the Suez Canal deliver cargo through the Red Sea to Europe. Some cargos shipping liquefied natural gas have recently begun changing routes for longer voyages to bypass the region, Bloomberg ship tracking data shows.
Over the past two years, the Suez Canal has become the main shipping artery for transporting LNG that European countries have used to replace Russian pipeline gas. This year, the importance of the route has increased due to the workload of the Panama Canal, as vessels shipping cargo to Southeast Asian countries are now often forced to go through the Suez.
Despite significant concerns over geopolitics, gas prices in Europe have recently remained in a relatively narrow range. They are set to lose over 50% for the year thanks to high fuel inventories and muted demand, which inspires optimism during the heating season.
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