European natural gas prices at 4-year peak: 90 Euro threshold exceeded

Supply concerns originating from West Asia pushed prices in the European natural gas market to their highest levels in the last four years. Dutch TTF futures climbed to 90.24 Euros per megawatt-hour during the day, crossing the 90 Euro threshold for the first time since 2022, before dropping back to 84.32 Euros following reports of diplomatic initiatives.

Levels High Compared to Pre-War Period

Despite the sharp intraday pullback, pressure on European energy markets persists. Prices remain more than double the levels seen before the outbreak of the war in Iran. High natural gas prices exert pressure on electricity generation costs, industrial activities, household expenditures, and the inflation outlook.

The fill rate of natural gas storage facilities across Europe stands at approximately 75 percent. This rate points to the lowest storage level recorded for the same period of the year since 2009. In Germany, storage occupancy is slightly above 61 percent.

LNG Competition and Fiscal Pressures

The continuation of disruptions in LNG exports from the Persian Gulf increases the pressure on prices. Since one-fifth of global LNG supply is met by this region, shipment disruptions affect importers in Europe and Asia. Rising Asian LNG prices indicate that competition for cargoes between Europe and Asia could intensify during the winter months.

European governments' fiscal space to reintroduce measures such as price interventions and tax cuts is more limited compared to the previous crisis period due to high budget deficits and rising borrowing costs.