European gas prices skyrocketed by 35% on Wednesday, reaching a high of €42 per megawatt hour (MWh) on the Dutch Title Transfer Facility (TTF), Europe's most commonly used price benchmark.
Analysts attributed the spike to concerns over potential supply shortages caused by strikes at liquefied natural gas (LNG) facilities in Australia, in particular those owned by Chevron and Woodside Energy, which could begin as early as next week.
Gas prices in Europe have sharply decreased since the beginning of this year, after peaking at €340 per MWh in August 2022. In May this year prices fell below €30 per MWh for the first time since June 2021.
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On Wednesday, Leonhard Birnbaum, the CEO of E.ON, one of Europe's largest energy network operators, warned that the continent's energy "crisis is not over yet".
"We have to be clear that the structural change due to the Russian war against Ukraine and the dropout of Russian gas for the supply of Europe is going to stay," Birnbaum told Bloomberg Television. "Therefore, the crisis is not over and we have to do our part to stabilise the situation as much as we can in Europe."
Birnbaum added that Europe's drastic reduction in Russian energy imports will lead to prices being "structurally higher" in future. "So here we have roughly a doubling or tripling of prices on the gas side [relative to pre-Covid prices], and that is a fact that is not going to go away, I'm afraid, not in the short-term."
