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Gas price stabilized, the situation in the Middle East may not escalate

16 April 2024

Reference prices for natural gas on the European market were stable on Monday, as traders expect Israel’s response to Iran’s attack to be limited, which will not create additional risks to global energy supplies, reports Bloomberg.


On Monday, natural gas futures for delivery in the following month rose by only 0.11%, up to 30.77 euros for one Megawatt-hour (MWh).


“Iran’s attack is unlikely to lead to further escalation for the time being, even if medium-term risks have increased. However, risks have clearly increased as a result of the weekend attacks. More broadly, these events could be symptomatic of the broader challenges to global cooperation,” say Citigroup Inc bank analysts, according to Agerpres.


Iran launched dozens of drones and missiles at Israel late Saturday in response to an attack attributed to Israel on the Iranian consulate in Syria on April 1, which killed six Syrians and seven members of the Revolutionary Guards, including two generals.


Although Europe does not buy large quantities of gas from the Middle East region, its dependence on global markets has increased after Russian pipeline gas supplies fell dramatically after the start of the war in Ukraine. Even events that take place far from home have an impact on prices and volatility has become a defining feature of the market after the energy crisis.


The European continent is focused on replenishing stocks for next winter, after coming out of the winter that passed with a record degree of gas storage filling. Mild weather and modest industrial demand kept consumption in check.


“Given that the gas stocks in the European Union are at a historical maximum for this time of the year, there is no reason to panic,” say Engie analysts.


However, gas deliveries from Norway to the European continent remain at a reduced level, following unscheduled maintenance work at some of the facilities in Norway. The works are expected to last until at least Tuesday, according to the network operator Gassco.



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