MOSCOW, September 14. /TASS/. European gas prices could rise to $1,200-$1,300 per 1,000 cubic meters if the winter is cold and the conflict in the Middle East continues at the same time, Finam Financial Group analyst Sergey Kaufman told TASS.
Earlier, the price of the October futures contract at the TTF hub in the Netherlands exceeded $1,000 per 1,000 cubic meters for the first time since December 2022. Meanwhile, spot gas prices at Europe's main trading hubs had already exceeded $1,000 per 1,000 cubic meters last week. Gazprom noted that the approaching heating season is rapidly reducing opportunities to replenish gas reserves in Europe's underground storage facilities, while gas prices have already reached levels seen during the energy crisis in late 2022. Russian President Vladimir Putin said earlier he did not rule out that European gas prices could rise as high as $1,500 per 1,000 cubic meters.
According to Kaufman, in the medium term, gas price dynamics will depend entirely on the situation in the Middle East and winter weather. "In a scenario involving a cold winter and continued tensions around Iran, we see the possibility of a further rise to $1,200-$1,300 per 1,000 cubic meters. At the same time, we do not currently expect a gas crisis as severe as the one in 2022. The EU is now less dependent on gas amid the development of renewable energy and lower demand, while supply on the LNG market is gradually increasing, so we do not expect urgent purchases at any price," he said.
If the Strait of Hormuz reopens soon, prices could even fall to around $600 per 1,000 cubic meters, the expert noted. However, a full normalization of prices should not be expected over the next 12 months even if the Strait of Hormuz reopens soon, as low inventory levels at European underground gas storage facilities will generate additional demand, the Finam analyst added.
"At the beginning of the conflict in the Middle East, when supplies from Qatar stopped, European importers bet on the conflict being short-lived and planned to replenish underground storage facilities more actively once the situation normalized. Against this backdrop, they chose not to compete aggressively with the Asia-Pacific market and allowed some supplies to go east. In retrospect, however, that strategy now appears to have been a mistake. There are less than two months left before the start of the active heating season, while EU underground gas storage facilities are only 68% full," Kaufman said.
This is 12 percentage points lower than a year ago and 25 percentage points below the level two years ago. European importers' attempts to make up at least some of the shortfall are pushing prices higher. "It would be a good outcome if storage facilities could be filled to 75% by the start of the withdrawal season, but even that would still be a low level," the expert concluded.
