European natural gas prices climbed above €80 per megawatt-hour on Wednesday, reaching their highest level since January 2023 as the conflict in the Middle East heightened concerns over energy supplies.
Benchmark futures rose by as much as 6.8% to €80.98, extending a sharp rally that has more than doubled prices since the start of the war. Prices remain below the extreme levels recorded during Europe’s energy crisis.
The increase has been driven by fears that disruption to liquefied natural gas shipments could further tighten supplies to Europe. The Strait of Hormuz, a key route for global energy trade, has been affected by the conflict, adding a risk premium to gas markets.
European storage facilities were 67.12% full on 8 September, according to Gas Infrastructure Europe. That was significantly below the level recorded at the same point last year, with Germany’s storage sites 54.75% full and the Netherlands at 50.39%.
The European Commission said last week that there was no immediate threat to the bloc’s gas security, despite storage levels being lower than in previous years. It said Europe was better prepared than during the 2021-22 crisis because of greater supply diversification, increased liquefied natural gas import capacity and reduced demand.
The International Energy Agency said on Wednesday that governments should consider stronger gas reserves, more flexible commercial contracts and closer international co-operation to improve resilience against future supply disruptions.
