Benchmark natural gas prices in Europe rose on Monday as forecasts of cooler temperatures added to rising tensions in the Middle East after Yemen’s Houthi rebels seized a cargo ship in the southern Red Sea.

photo stove eye surrounded by coins

Natural gas has become more expensive in Europe

On Sunday, Israel said the incident was “an Iranian act of terrorism“, with consequences for international maritime security. The ship belongs to Great Britain and is operated by the Japanese. On Monday morning, at the TTF gas hub in Amsterdam, where reference prices are set in Europe, natural gas futures for delivery next month rose 6.9%, then advanced 3.4 %, at 46.58 euros for one Megawatt-hour (MWh). The increase comes after four sessions of decreases in European natural gas prices, reports Bloomberg.

In most of northwestern Europe, temperatures are expected to fall below normal towards the end of the month, which could increase heating demand. Separately, the capture of the ship in the southern Red Sea raises fears that the Israel-Hamas war could lead to wider disruption of shipping.

So far, energy shipments have been largely unaffected by the conflict in the Middle East, but the Red Sea, including the Suez Canal, is one of the busiest shipping routes in the world. Oil tankers from Qatar – a key exporter of liquefied natural gas (LNG) – regularly pass through the region on their way to Europe.

Currently, anything that could theoretically become a problem seems to lead to an increase in prices. Potentially the conflict could expand and disrupt flows from Qatar to Europe, but there are currently no indications that this will happen”, said Jonathan Stern, visiting senior researcher at the Oxford Institute for Energy Studies.

The oil market is also facing difficulties. In September, the price of a barrel of crude reached $98, the highest level since 2023, but since then it has declined, reaching around $80. Fears regarding the evolution of the economy and demand affected prices, despite the support from production cuts decided by OPEC+ (Organization of the Petroleum Exporting Countries and allies) and the conflict in the Middle East. The next meeting of OPEC+ is scheduled for November 26, in Vienna, and analysts are closely following the statements of the main oil producers.

Europe is preparing for winter with full gas storage capacities and massive LNG imports, but the continent remains vulnerable to supply risks after last year’s energy crisis significantly reduced Russian gas flows.