(MENAFN) Natural gas prices in Western Europe experienced a notable increase of over 8 percent on Wednesday, based on data from the London Intercontinental Exchange (ICE). Gas futures for July delivery at the Title Transfer Facility (TTF) hub in the Netherlands rose by 8.4 percent to USD429.8 per thousand cubic meters, or EUR37.055 per megawatt-hour in household terms.
This surge is attributed to escalating tensions in the Middle East, a critical energy supplier and a vital oil shipping passageway.
The ongoing conflict between Israel and Gaza, with potential spillover effects on the broader region, has contributed to the market volatility. Additionally, recent airstrikes by United States forces targeting Kataib Hezbollah militants in Iraq and renewed assaults by Houthi militants on shipping routes in the Red Sea have intensified concerns about regional stability.
Of particular significance is the impact on shipping routes, as vessels traveling to the Mediterranean via the Suez Canal deliver cargo through the Red Sea to Europe. Bloomberg ship tracking data indicates that some cargos shipping liquefied natural gas (LNG) have altered routes, opting for longer voyages to bypass the region.
Over the past two years, the Suez Canal has become a vital shipping artery for transporting LNG, which European countries have increasingly relied on to substitute Russian pipeline gas.
The canal's importance has grown further this year due to increased traffic resulting from congestion at the Panama Canal. Vessels shipping cargo to Southeast Asian countries are often redirected through the Suez, contributing to the heightened geopolitical concerns impacting gas prices.
Despite the significant geopolitical uncertainties, European gas prices have maintained a relatively narrow range in recent times. Factors such as high fuel inventories and muted demand have influenced this stability, with prices poised to register a year-to-date decrease of over 50 percent. The combination of these factors, along with ongoing geopolitical developments, continues to shape the outlook for gas markets in Europe.
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