European gas prices hit highest level since 2022

European natural gas prices have climbed to their highest level since 2022, as escalating conflict in the Middle East raises concerns over global energy supplies and drives gains across commodity markets.

The European gas index rose 4.35% to €100 per megawatt-hour (MWh) at 1530 GMT, briefly exceeding the threshold for the first time since 2022 before trading just below that level.

LNG disruptions heighten market concerns

Growing concerns over liquefied natural gas (LNG) supplies from the Persian Gulf have intensified market volatility. The region previously accounted for nearly a fifth of global LNG supply, making potential disruptions a major concern for energy-importing countries.

The uncertainty has pushed prices higher across crude oil, transportation fuels, natural gas, electricity and food markets.

Brent crude futures rose 2.2% to $116 per barrel, while heating oil prices gained 1.6% to $4.80 per gallon.

Europe faces prolonged pressure on energy costs

Natural gas prices are expected to remain elevated for at least another year, even if the conflict ends and winter weather remains mild, as Europe faces the challenge of replenishing storage facilities following a sharp decline in reserves.

Rising wholesale gas prices are also increasingly feeding through to household and industrial energy bills.

Gas-fired power plants frequently set electricity prices during periods of peak demand, meaning sustained increases in gas costs could further intensify pressure on consumers and businesses across Europe.

Source:AA