Gas prices in Europe have skyrocketed amid the U.S. naval blockade of Iran — Bloomberg
Natural gas prices on European markets surged sharply following the U.S. announcement of its intention to block all ships in the Strait of Hormuz heading to Iranian ports.
Bloomberg reports this.
This decision effectively dashed hopes for the stabilization of energy supplies from the region, through which about one-fifth of the world’s liquefied natural gas (LNG) passes.
During Asian trading, benchmark futures jumped 18%.
Later, with the opening of European markets, the price of Dutch futures with the nearest delivery date settled at 47.34 euros per megawatt-hour, which is 8.5% higher than previous levels.
The escalation was a result of failed peace talks in Pakistan between representatives of the U.S. and Iran.
The lack of an agreement has jeopardized the resolution of the armed conflict, which has been ongoing for six weeks and is significantly constraining the global energy market.
The situation is complicated by the fact that the Strait of Hormuz is a critically important shipping route for tankers.
“The U.S. blockade of Iranian vessels through the Strait of Hormuz will likely force Iran to enforce its own blockade even more strictly, which means that the global market will increasingly lack LNG from the Persian Gulf,” emphasized Arne Loman Rasmussen, chief analyst at Global Risk Management.
Analysts predict a new wave of volatility as the supply shortage becomes increasingly acute.
Although the bulk of Middle Eastern gas has traditionally been directed to Asia, the prolonged closure of the strait is forcing European and Asian buyers to aggressively compete for available resources.
For the European Union, this price shock is particularly painful, as countries are just beginning to prepare for the upcoming heating season.
The need to build up reserves amid limited access to LNG is forcing traders to factor high risks into their contracts.
Overall, since the start of active hostilities in late February, gas prices in Europe have risen by nearly 50%.
Hopes for de-escalation, which emerged last week following reports of a possible ceasefire, proved to be in vain.
U.S. gas prices have surged to a historic high
Additionally, the gas giant Hubshan, located in the United Arab Emirates, was forced to completely halt all operations for the second time.
As a reminder, the U.S. is surprised by the scale of Iran’s strike.
Iran may also emerge from the war even stronger.
