EurOil: European gas prices take hit from Israeli conflict, closure of Balticconnector

The conflict in Israel, coupled with the shutdown of the Balticconector pipeline linking Finland and Estonia, has triggered a spike in European prices, with the TTF front-month contract climbing this week to its highest point since the looming risk of strike action at major Australian LNG facilities in August.

The TTF front-month contract averaged €49.5 per MWh ($560 per 1,000 cubic metres) on October 10, up from a recent low of €36.2 seen on October 6. As of 16:00 GMT on October 11 it was trading at €46.3 per MWh.

The surge in prices this week comes after Israel declared a state of war early on October 8, after Palestinian fighters entered Israeli towns and villages, killing hundreds and capturing hundreds more as hostages. The conflict has led Israel to halt its gas exports but this does not affect the European market directly, although it may result in Egypt, which normally receives this gas, restricting its LNG exports if necessary if the outage is prolonged. More significantly, there are fears that the conflict could escalate to involve more countries in the region, potentially threatening energy flows.

If you’d like to read more about the key events shaping Europe’s oil and gas sector then please click here for NewsBase’s EurOil Monitor.