EUROPE GAS - European gas prices rise by more than 25% due to Middle East conflict
Standard Dutch and British wholesale gas prices rose by more than 25 percent on Monday after Iran?and Israel intensified?attacks?in the Middle East?and?after the suspension of energy shipments via the Strait of Hormuz. Trade sources report that most tanker owners, major oil companies and trading houses have stopped shipping crude oil, fuel, and liquefied gas (LNG), through the Strait of Hormuz after Tehran warned against it.
Europe has increased its imports of LNG in recent years, as it seeks out Russian gas after?Russian invasion of Ukraine.
A full or prolonged closure of the Strait of Hormuz would result in a global increase in competition for gas sources, and thus higher prices.
Around 8-10% of European LNG imports are directly linked to the Hormuz flow. In the event of a disruption, Asian buyers would bid aggressively for U.S. "LNG cargoes will tighten the Atlantic basin, pushing European prices higher and forcing European prices to rise sharply," said SEB commodities analysts Ole Hvalbye.
ICE data revealed that the Dutch front-month contract, which is a benchmark for Europe and seen as a price reference, had risen by almost 8 euros to 39.96 euros/MWh or $13.70/mmBtu at 0842 GMT.
ICE data shows that the British April?contract is up by 23.43 pennies at 102.00 cents per therm.
Analysts warn that a prolonged disruption may cause prices to rise.
Analysts at Rabobank stated that even a partial disruption of shipping through the Strait of Hormuz, but not a complete closure, would "likely" raise TTF to 50 euros/MWh due to Europe's supply.
Gas Infrastructure Europe's latest data shows that Europe also relies on LNG imports to fill up its "gas storage sites" which were depleted during the winter. They are currently about 30% full.
Analysts at Mind Energy stated that "European Storages are significantly lower than they were the same time last year, and a'shortfall in Middle Eastern Supply would also have a direct effect on prices in Europe."
The benchmark contract on the European carbon markets was down by 0.49 euros at 69.80 euro per metric ton. (Reporting by Susanna Twidale, editing by Nina Chestney).
(source: Reuters)
