War in the Middle East: an increase in the price of gas to be expected but “not before May”, anticipates the Energy Regulatory Commission

European gas soared 35% this Thursday, after attacks on energy infrastructure in the Middle East. Emmanuelle Wargon, president of the Energy Regulatory Commission (CRE), confirmed this Friday that there will be “no increase in gas before May”.

In May, “I can say that it will not be + 35% (…) We are in an area of ​​this order (+ 15%, Editor’s note) but once again we do not have all the quotes”, she declared on RMC, promising a “not gigantic impact on the bills”. “It will depend on whether this situation lasts or not,” she continues, recalling that France depends on the international market.

“We import 95% of the gas we consume in France. When it goes up on the international wholesale markets, it also goes up for the French and for households,” reports Emmanuelle Wargon.

“It’s not heating season”

The president of the Energy Regulatory Commission indicates that there are “several reasons” which explain why “the repercussions in May will not be enormous”. One of them, she describes, lies in the fact that in the household bill, “there is also the volume”.

“In May, it’s not the heating season. In a bill, when you heat with gas, two thirds of the bill is for heating. So when prices increase at a time when we are consuming less gas because we are not heating, obviously the impact on the bill will be more limited,” she explains.

On the other hand, “if gas prices are still high when it starts to get cold again and therefore if it accumulates over the whole year”, the impact will be more significant.

Prices that make the “yo-yo”

Emmanuelle Wargon reports that 40% of French people have chosen fixed price contracts, “so they will not be affected at all until the end of the contract”. On the other hand, for those who have contracts indexed to world prices, prices move with a two-month gap. “In April, as these are February prices, they were still low. On the other hand, in May, it will be the prices of March, so it will be higher,” she explains, mentioning prices that “yo-yo” and that “really move all the time.”

The attack on the world’s largest liquefied natural gas (LNG) site, located in Qatar, as well as new refineries in the Middle East shook the gas and oil markets on Thursday. The announcement of these strikes propelled the price of the Dutch TTF, the European gas benchmark, by 35% at the start of the session to levels not seen since January 2023, after Russia’s invasion of Ukraine in February 2022.

The surge, to more than 68 dollars, calmed down at the end of the day, and the megawatt hour of gas then climbed by 13.15%, to 61.85 euros.