The energy market has encountered troubles again. Gas prices in Europe have jumped roughly by 13%! The cause of the rally is a significant drop in supplies from Norway.
Natural gas futures at the TTF hub in the Netherlands soared by 12.79%, reaching $439 per 1,000 cubic meters. It is the highest increase since December 8, 2023, experts say.
According to Bloomberg, the nearly 13% price hike was recorded after a sharp decrease in exports from Norway. The reason for this was a sudden power outage in the town of Nyhamna at the Norwegian gas processing plant. As a result, Norwegian gas supplies to the Easington terminal in Great Britain shrank to nearly zero. Importantly, up to a third of the total volume of natural gas delivered to the United Kingdom passes through this terminal.
Experts underscore that this incident is yet another indicator of Europe’s dependence on gas imports. The gas market is highly sensitive to any volatility even though European storage is almost 70% complete and LNG demand in the European Union is gradually recovering. Currently, Europe is becoming more reliant on Norwegian gas imports, whereas it previously depended on Russian gas. Besides, LNG supplies from the US and Qatar matter a lot to the EU.
At present, gas flow to Europe has significantly dwindled. In Asian countries, fierce heat requires a huge amount of energy resources for air conditioning, leaving Europe with “gas scraps.”
Previously, the International Monetary Fund (IMF) forecasted that Europe would face "constantly rising energy costs." According to IMF analysts, the EU’s energy security is in jeopardy. Therefore, the European economy will become increasingly vulnerable to bottlenecks with gas and other petroleum supplies.
On May 27 of this year, EU countries faced a rapid rally in gas prices. At the end of May, natural gas futures jumped by nearly 3%. The contracts for July delivery rose to $393 per 1,000 cubic meters. This is not the limit.