European gas prices have surged to a year-high amid supply challenges and geopolitical tensions. The Amsterdam-based Title Transfer Facility (TTF), Europe’s main gas benchmark, recently climbed to €43.61 per megawatt hour — its highest level since December 2023. The spike underscores Europe’s sensitivity to supply disruptions, even though gas storage levels are around 95% full.
A major factor driving this increase was a temporary production halt in Norway. Equinor, a state-owned energy company, suspended operations at the Sleipner B natural gas platform after detecting smoke, resulting in a reduction of daily exports by about 5.1 million cubic metres. Norway now accounts for roughly 30% of Europe’s natural gas imports, solidifying its status as the region’s top supplier. This shift follows Europe’s decision to scale back reliance on Russian gas after the 2022 Ukraine invasion.
Geopolitical risks in the Middle East have further complicated the market. Hostilities between Israel and Hezbollah, along with the potential disruption of the Strait of Hormuz — a critical route for LNG shipping that handles around 20% of global flows — have raised concerns. As a result, Dutch TTF futures have risen around 12.8 per cent over the previous month.
While producers like Equinor benefit from the upswing, gas distributors face stress due to higher operational costs and margin calls on derivative contracts. In Germany, some firms have had to increase credit lines with banks. This has led to a tightening of short-term credit markets for energy-dependent industries.
Despite the current volatility, gas prices are still below the highs reached during the early stages of the Ukraine conflict in August 2022, where prices per megawatt-hour reached €339.20. Nevertheless, analysts caution that market stability is fragile. Europe’s winter energy outlook remains uncertain as the expiration of the Russia-Ukraine transit agreement in December looms, potentially affecting 5% of Europe’s supply. Additionally, Europe is likely to face increased competition with Asia for LNG shipments as winter intensifies. Analysts suggest that prices could surge to €60-70 per megawatt hour if geopolitical tensions escalate.