European Gas Prices Dip as Israeli Strikes on Iran Appear Limited
European natural gas prices have taken a dip after Israeli airstrikes on Iranian targets over the weekend focused on military facilities and avoided civilian infrastructure, calming fears of a major supply disruption, Bloomberg reports.
Benchmark futures dropped as much as 4.3% on Monday, following a week of sharp increases driven by escalating tensions in the Middle East.
The initial concern among market analysts was that a broader escalation would disrupt critical energy shipments through the Strait of Hormuz, a vital waterway for oil and liquefied natural gas (LNG). However, Israel’s restrained response, while impactful, did not lead to widespread disruption of energy routes.
Despite Europe’s gas storage facilities currently being over 95% full, the market had been on edge in recent weeks, anticipating Israel’s response to a missile barrage launched against its territory earlier in the month. Additional supply anxieties had also arisen from unexpected outages in Norway and the United States.
With the immediate threat of supply disruptions easing, a more optimistic outlook is emerging. Weather forecasts for northwest Europe predict mild conditions for the next two weeks, signaling a decreased demand for heating fuel and pushing gas prices further down.
Dutch front-month futures, the benchmark for European gas prices, fell 2.1% to €42.62 per megawatt-hour on Monday morning.
