European Gas Tops $1,000, Brent Crude Hits $108
European gas on the TTF exchange topped $1,000 per thousand cubic meters for the first time since December 2022, as Brent crude jumped up to 3.7 percent after Saudi Arabia shut its East-West pipeline.
The price of natural gas at Europe’s TTF hub crossed $1,000 per thousand cubic meters this morning, the first time it has done so since December 22, 2022, while Brent crude on London’s ICE exchange jumped as much as 3.7 percent on Monday to more than $108 a barrel, according to Bloomberg Adria data.
The trigger was Saudi Arabia’s decision to shut down its East-West pipeline as a precaution. Saudi Arabia announced late Friday that it was halting the pipeline’s operation, a day after an attack on the infrastructure. No timeline was given for when it would resume.
The pipeline has a capacity of roughly seven million barrels a day and is Riyadh’s main export route around the Strait of Hormuz. Iraq has taken steps to limit the fallout from the attack on the infrastructure: Prime Minister Ali al-Zaidi ordered an investigation on Saturday, after it was established that the attack was launched from a location inside a region bordering Iran.
How long could the disruption last?
June Goh, senior oil markets analyst at Sparta Commodities SA, told Bloomberg that the duration of the outage is the key question for the market: “It all comes down to duration.” If the flow is restored quickly, she said, the impact should be limited, since reserves can be drawn from the Saudi port of Yanbu at the pipeline’s western end. A prolonged shutdown, she added, could force Saudi Arabia to cut production.
Suvro Sarkar, head of energy sector research at DBS Bank Ltd, offered a similar assessment, telling Bloomberg: “In Saudi Arabia, the reserves at Yanbu could support exports for five to seven days.” He said the short-term direction for prices points toward a test of the $120-a-barrel level.
The numbers show just how sharp the jump was. The November Brent futures contract rose 2.6 percent on Monday, to $107.29 a barrel, according to Bloomberg Adria data at 8:16 a.m., while the October WTI contract climbed at the same rate, to $102.68. Later in the day, Brent climbed to $107.74 and WTI to around $102.88 a barrel, according to Biznis Kurir.
Why did gas break a threshold not seen since 2022?
At the Dutch TTF hub, Europe’s largest, the October futures contract opened trading at $978.9 per thousand cubic meters, up 2.6 percent, and reached $991.5, up 3.9 percent, by 7:55 a.m. The previous close was $954.1. In euros, TTF reached 83.39 euros per megawatt hour, according to Biznis Kurir, after 79.52 euros earlier in the session.
The rise was not sudden today alone. The average European gas price was $637.5 in July and $745.4 in August, and it crossed $900 in early September. This morning’s jump above $1,000 is a continuation of that trend, not an exception.
Diplomacy is also weighing on prices. A meeting between an Iranian representative and Gulf states on navigation through the Strait of Hormuz, planned for Monday in Oman, was postponed. Oman’s foreign minister, Badr Albusaidi, confirmed the postponement, while Bahrain announced it would not attend the meeting.
Elsewhere, markets were mixed. Gold fell to $4,360.42 an ounce, down 1.10 percent. Moscow’s MOEX index lost 1.48 percent, while London’s FTSE gained 0.55 percent.
We previously reported that Brent stood at $106 a barrel and gas in Amsterdam at up to 82.59 euros per megawatt hour. This morning’s figures show that both oil and gas prices have kept climbing since then, with DBS Bank warning that oil could head toward $120 a barrel if the Saudi disruption drags on.
