European gas prices hit 100 euros per MWh

European gas prices have reached 100 euros per megawatt-hour (MWh) for the first time since 2022, driven by the war in the Middle East and low stock levels as winter approaches. The Dutch TTF futures contract, the European benchmark, was up more than 4% to 99.97 euros/MWh, after briefly touching 100.30 euros.

Historical context of gas prices

This remains a level significantly lower than the peaks reached during the worst of the 2022 energy crisis, which exceeded 300 euros/MWh. However, ten years ago, the average price generally fluctuated between 15 and 25 euros/MWh, showing a dramatic increase over time.

Low gas reserves in Europe

As winter approaches, European gas reserves were filled only to 74.10% by mid-October, below the 83.04% observed at the same time last year. Germany, the continent's largest consumer, is lagging behind with reserves at 60.19% compared to 75.92% last year, according to the European platform Aggregated Gas Storage Inventory (AGSI).

Impact of reduced LNG exports

These low stock levels "make Europe vulnerable to cold weather and new disruptions in liquefied natural gas (LNG) exports from the Middle East," stated Arne Lohmann Rasmussen, an analyst at Global Risk Management, to AFP in mid-October. Qatar, the Middle East's largest LNG exporter, "is currently exporting at only 20–30% of its capacity," noted Norman Liebke, an analyst at Commerzbank.

Competition for gas supply

The sustained loss of part of the LNG supply has increased competition between Asian and European buyers, two major gas importing regions, which is driving up prices. In France, the increases in recent months have already affected household bills, with the Energy Regulation Commission announcing a 6.6% rise in the gas sales reference price on November 1st.

Rising oil prices

Meanwhile, oil prices have also tended to rise on Tuesday. The price of the North Sea Brent crude oil for December delivery rose 1.12% to 115.16 dollars, while the American equivalent, the West Texas Intermediate crude oil for delivery the same month, gained 1.81% to 101.71 dollars. The market is concerned about reports of a new campaign of strikes by the United States on Iran after the American midterm elections.

Speculation on Middle East tensions

According to the Wall Street Journal, citing "people informed of these discussions," the United States has asked several Gulf countries to prepare for a short and intense campaign after the American midterm elections. Analysts suggest that the market expects Brent to remain above 110 dollars per barrel, or even higher, until after the elections.

Risk of further conflict

A large-scale war would imply "Iranian retaliatory attacks against energy infrastructure" and would boost black gold prices, estimates Arne Lohmann Rasmussen, an analyst at Global Risk Management. "Diplomatic initiatives can cause temporary price drops," notes the analyst, but "we maintain our scenario of high prices for a long time."

European gas prices return to pre-crisis levels

The Dutch TTF, a reference point for the European market, has regained levels that had not been observed since the energy crisis linked to the war in Ukraine. This level had not been exceeded since the energy crisis of 2022 caused by the Russian invasion of Ukraine.