Gas prices are rising in line with higher contracts and the Iran conflict

European forward power contracts increased on Monday as a result of higher oil and natural gas prices. This was due to the fact that energy infrastructure had been 'damaged' and tanker shipments through the Strait of Hormuz were disrupted by the conflict in the Middle East.

Israel launched new air strikes on Iran on Monday and increased its offensive to include attacks against Iran-backed Hezbollah in Lebanon. Tehran claimed that it had launched a wave of new missiles which "opened the gates of fire" for Israel.

Around 20% of world LNG transits through the Strait of Hormuz. Traders fear that a suspension or complete closure would increase competition and prices for other gas sources.

Europe has become more reliant upon LNG in its efforts to phase out Russian Gas.

At 0910 GMT the German year-ahead contract for baseload?was up by 3.6% to 82.50 Euros per megawatt-hour, while the equivalent French price?rose by 1.2% at 51.00 euros/MWh.

Analysts at Engie EnergyScan say that volatility is expected to be high throughout the day and week.

Contracts rose due to an anticipated drop in wind energy supplies.

LSEG data shows that the German day-ahead power contract is now 104 euros/MWh. This represents an increase of 11.9% over the price paid on Friday for delivery on Monday.

The French equivalent contract cost 61.25 Euros/MWh - a 109% increase from the Friday price for delivery on Monday.

LSEG data shows that German wind power production is expected to 'fall' by 5.4 gigawatts to 10 GW on Monday, while French wind generation is forecast to fall by 4.9 GW - to 3 GW.

LSEG data revealed that power consumption in 'Germany' is forecast to increase by 1.2 GW Monday to 58.2 GW while French demand will rise 1.4 GW from 53.2 GW.

The French nuclear power capacity was unchanged at 84%.

The benchmark contract on the European carbon markets fell 0.4%, to 70.02 Euros per metric ton.

(source: Reuters)