European gas prices rose sharply on Wednesday over fears that the current conflict between Israel and Hamas in Gaza could expand into a wider regional war.
Gas prices increased by more than 7% on Wednesday morning to more than €37 per megawatt hour (MWh) on the Dutch Title Transfer Facility (TTF), Europe's most commonly used price benchmark. At around 13:00, gas prices had fallen to just under €36 per megawatt hour (MWh) but remained 5% above Tuesday's levels.
The spike followed US strikes on Iran-backed militias in Iraq as well as attacks by Yemeni Houthi militants on shipping vessels in the Red Sea. The latter incidents caused several shipments of liquefied natural gas (LNG) to be rerouted to bypass the Red Sea, thereby making lengthier and costlier journeys, according to Bloomberg News.
Related News
- EU agrees to join US-led Red Sea coalition
- UN calls for humanitarian ceasefire, EU divided on Israel-Hamas war
Despite the ongoing geopolitical tensions, EU gas prices have fallen by 50% over the course of this year. Analysts attribute the decline to the bloc's considerable gas reserves as well as relatively warm winter weather, which in turn has suppressed demand.
Promisingly, the weather in Europe is expected to remain mild until January, increasing analysts' confidence in the EU's ability to avoid an energy crisis this winter.
Oil prices also dropped slightly on Wednesday, with a barrel of North Sea Brent oil costing $80.66 around noon, down 0.51% from Tuesday.
