European natural gas prices have surged to levels not seen since the 2022 energy crisis, as markets grow increasingly concerned about supply adequacy ahead of winter and the potential fallout from rising tensions in the Middle East. On Monday, October 26, European benchmark contracts briefly surpassed €97 per megawatt-hour. Next-month delivery contracts on the Dutch TTF exchange climbed as much as 3.5% in early trading, before paring back some of those gains. At 08:50 Amsterdam time, the price stood at €96.88 per megawatt-hour, up 3.2% on the day. The renewed price surge is deepening concerns about energy costs for European households and businesses, just as heating demand is expected to rise sharply. At the same time, tightening global gas supply could intensify competition between Europe and Asia for liquefied natural gas (LNG) cargoes.
Read: Oil & natural gas: How prices are moving amid uncertainty over the war in the Middle East
Storage at seasonal lows, Europe grows more dependent on LNG shipments
A key driver of market pressure is Europe’s depleted gas storage levels, as the continent enters its peak consumption season. EU gas storage facilities are filled to approximately 75% capacity — the lowest level for this time of year since records began in 2009. In Germany, storage stands just above 61%, amplifying concerns about supply adequacy through the winter months. Meanwhile, European LNG imports in October are running below last year’s levels, even though this period typically sees an uptick in shipments ahead of winter. Additional pressure is coming from outages at Norwegian production facilities, adding further uncertainty to the supply outlook. Europe’s dependence on seaborne LNG shipments has grown significantly since Russian pipeline gas flows were curtailed in 2022. This shift has left the European market more exposed to disruptions in global supply chains, as well as to demand swings from other major consuming regions.
Natural gas: Middle East tensions and cold weather add to price pressure
Ongoing hostilities and disruptions across the Persian Gulf region are fuelling fears of potential spillover effects on energy supplies. According to Bloomberg, Iran is preparing for the possibility of a new US military campaign ahead of November’s midterm elections and is considering retaliatory measures across the broader region. Markets are closely monitoring both military developments and diplomatic efforts aimed at de-escalation. Any escalation affecting energy flows could meaningfully shift the balance in global markets, keeping prices under sustained upward pressure. At the same time, temperatures are forecast to drop across large parts of Europe in the coming days, which is expected to drive a notable increase in heating demand. This rise in consumption comes at a time when available storage reserves remain limited. The coming weeks are seen as critical, as European markets must meet rising seasonal demand while simultaneously maintaining adequate reserves heading into winter.
Rising gas prices are already feeding through to electricity markets
The surge in natural gas prices is already making its mark on the electricity market. In France, next-month power delivery contracts have exceeded €200 per megawatt-hour for the first time since January 2023. This development highlights the risk that pressure from the gas market could spill over into broader energy costs. Should elevated prices persist, they could place a particularly heavy burden on energy-intensive industries and add fresh inflationary pressures across the economy.
Under certain conditions, prices could push toward €100
Tom Marzec-Manser of Wood Mackenzie, who heads the firm’s European natural gas and LNG market analysis team, has suggested that prices could rise further — potentially toward €100 per megawatt-hour. He noted that this scenario would hinge on there being no signs of improvement in the Middle East situation before the US midterm elections. That said, current natural gas prices remain well below the extreme peaks reached during the previous energy crisis. Where prices go from here will depend largely on weather conditions, demand trends, LNG import volumes, and the trajectory of geopolitical developments in the weeks ahead.
