European gas prices reach €100 per megawatt hour

On Wednesday, October 28, European wholesale gas prices reached €100 per megawatt hour (MWh) (126, 136, 244). This is the highest level recorded since the energy crisis began following the Russian invasion of Ukraine in 2022 (126, 136, 244). On the Amsterdam gas exchange, the price rose by 3.5% on Wednesday (244).

The price surge is linked to conflict in the Middle East (136, 244). Before the onset of the war involving Iran, prices were between €30 and €32 per MWh (136, 244). The instability threatens the Strait of Hormuz, a vital transit point for liquefied natural gas (LNG) from Qatar (126, 244). Le Monde reports that potential military escalation between the United States and Iran following the mid-term elections could further impact this maritime route (126). According to Kpler, 27 LNG cargoes exited the strait in September, an increase from seven in August (126).

The rising costs affect different types of energy consumers in various ways (136, 244). Approximately 8% of households use dynamic contracts, meaning they face immediate price increases (136). For instance, NOS reports that one large provider's rate rose to €1.95 per cubic meter, compared to €1.13 a year ago (136). Households with variable contracts, making up 37% of the market, typically see price adjustments every three to six months (136). Those with fixed contracts, which account for 54% of households, are not affected until their current term expires (136). Furthermore, because gas-fired power plants generate electricity, higher gas prices can lead to increased electricity costs (244).

Gas reserves in Europe are currently below normal levels (244). In the Netherlands, storage is at 66.4%, down from over 73% during the same period last year (244). NU.nl reports that these rising prices make it increasingly expensive to replenish gas stocks (244). For historical context, prices during the height of the 2022 crisis reached €340 per MWh (244).