The price of gas rises sharply in Europe – Expert warns of a long crisis

The price of gas futures jumped sharply in Europe in the morning when the market opened. After nine in the morning Finnish time, natural gas prices in Europe were about 35 percent higher than yesterday’s decision.

Gas futures quoted in the Netherlands were paid during the morning at their highest, more than 71 euros per megawatt hour.

The background was the escalation in hostilities in the Persian Gulf. During the night, Iran struck a liquefied natural gas facility in Qatar, causing extensive damage. Bloomberg’s under normal conditions, the facility supplies about a fifth of the world’s liquefied natural gas.

On Wednesday, Iran said the US and Israel had struck the South Pars natural gas field in the Persian Gulf. It is one of the largest gas production areas in the world, which Iran shares with Qatar. It was a significant escalation in the war, as the parties to the war have not previously struck directly at energy production areas.

According to Iran, the energy targets of the Persian Gulf countries are now free game for it.

As a result of the shocks, the price of crude oil in the market also continued to rise. The price of a barrel of Brent crude oil rose by around 10 dollars on Wednesday and by a few more on Thursday, reaching around 113 dollars.

In the United States, the price of natural gas jumped 6.5 percent on Thursday. In Europe, gas prices are more sensitive to disturbances, as imports from the Middle East are greater. In addition, the gas reserves accumulated last year have largely been emptied in Europe during the winter.

Investment company Global Risk Managementin chief analyst Arne Lohmann Rasmussen commented to Bloomberg in the morning that, at worst, the supply of liquefied natural gas from Qatar could be interrupted for months, even years.

“For the gas market, the crisis will not end even if the war ends and the Strait of Hormuz opens,” Rasmussen warned.

As a result of rising energy prices, financial markets are pricing in the European Central Bank raising the key interest rate twice this year, by a total of 50 basis points, or 0.5 percent.

President of the Federal Reserve Bank of America Jerome Powell on the other hand, stated at a press conference on Wednesday that increased energy costs are accelerating inflation, which clouds the outlook for expected interest rate cuts.