European gas prices hit highest level since early 2023

European gas prices reached their highest level since early 2023 on Wednesday, with the Dutch TTF benchmark earlier hitting 80.99 euros per megawatt-hour amid renewed US-Iran conflict and low European reserves.

At 1440 GMT, the Dutch TTF contract, the benchmark for European gas, was up 4.4 percent at 79.21 euros per megawatt-hour.

The rise came as Europe tries to replenish gas stocks before winter. The European Union requires member states to fill gas reserves to at least 80 percent of capacity by November 1 to reduce the risk of shortages in the coldest months.

Storage levels averaged 67 percent, down from 79 percent at the same time last year. Germany accounted for much of the decline, with stocks at 53 percent of capacity compared with 71 percent at the same point last year.

Industry lobby group INES said no similarly low storage level had been recorded at this time of year and warned that the “window for sufficient refill is closing”.

Europe also has to compete with Asia for liquefied natural gas shipments. The US-Iran war has effectively blocked the Strait of Hormuz, which before the conflict transported about one fifth of the world's LNG and oil.

Julien Mathonniere of Energy Intelligence told AFP that if disruptions in the Strait of Hormuz persist through winter, gas prices of 100 to 150 euros per megawatt-hour are plausible. Analysts cited by AFP considered a return to the 2022 peak unlikely, when the European benchmark TTF briefly exceeded 300 euros per megawatt-hour.