Gas prices jump after Israeli gas field halts production
Gas prices have jumped to their highest level since June with UK and European benchmarks rattled by the closure of one of Israel’s largest fields in the Mediterranean Sea.
Spot prices leapt in early afternoon trading, with prices rising on the domestic and Dutch benchmarks 13.3 and 12 per cent respectively .
Prices have hit £1.23 per therm on the UK Natural Gas Futures market and €49.25 per megawatt hour on the Dutch TTF Futures market.
By contrast, prices were trading as low as 88p per therm on Friday on domestic benchmarks.
If the spot market spike holds, it will be the highest closing price since April.
The spike follows Israel suspending production at the Tamar gas field, which is in range of Hamas rockets in Gaza.
Prices have been further supported following reports from Swedish and Finnish media that Finland’s government is set to say that damage to an underwater gas pipeline was not accidental.
The pipeline, which started to leak over the weekend, runs between Finland and Estonia, across the bay of Finland.
This news comes as prices have already been gradually climbing following the threat of more industrial action at LNG sites in Australia, where the two facilities affected by strike action are responsible for seven per cent of global supplies.
This comes as the International Energy Agency warned today that gas markets have entered a “challenging period of tight supplies and price volatility”.
In its latest gas market report, the Paris-based climate agency forecasts that instability across commodity markets is here to stay following a Kremlin-backed squeeze on continental gas flows.
This means bad weather conditions could cause further price swings this winter – even with record reductions in demand and European storage sites near full capacity.
It feared “this is no guarantee of stable prices throughout the season, particularly in the event of exceptionally cold weather.”
The group warned that only a substantial increase in global LNG production, concentrated in 2025-2026, could ease the pressure on supplies.
It predicts global LNG capacity is expected to expand by 25 per cent between 2022 and 2026, with the United States consolidating its position as the world’s largest LNG exporter through the construction of new liquefaction plants.
“Growth in LNG supply signals a shift to a more globalised gas marketplace, which will improve resiliency and the ability of suppliers and consumers to respond to supply and demand shocks,” the IEA said.