Andrea Innocenti For the first time since December 2022, TTF futures contracts in Amsterdam surpassed the €100 per megawatt-hour (MWh) threshold. The increase, more than 4%, marks the highest level recorded in the last four years, highlighting growing pressure on the European natural gas market.
This price jump is the result of a combination of seasonal, logistical and geopolitical factors.
Supply is experiencing significant compression as demand approaches its winter peak. Complicating the situation, tensions in the Middle East have added a risk premium that directly impacts wholesale prices.
Growing demand: winter and inventories below the seasonal average
According to the EU Agency for the Cooperation of Energy Regulators ( ACER ), Europe's gas reserves were only 75% full at the end of October, well below the nine-year average.
This reduced level reduces the safety margin for the colder months, when temperatures tend to drop and heating demand increases rapidly.
Weather forecasts point to a colder-than-expected start to the winter, prompting markets to consider a more rapid drawdown of inventories. The limited supply capacity during the summer season, due to slow replenishment and already low starting levels, has exacerbated the situation, creating a very tense demand environment.
Geopolitical Pressures: Middle East, Strait of Hormuz, and American LNG
The ongoing conflict in the Middle East, particularly tensions between Iran and Western countries, has led to a near-total disruption of LNG supplies from Qatar through the Strait of Hormuz. This disruption has resulted in an estimated additional cost of €18 to €33 billion for gas imports to Europe, assuming volumes remain unchanged.
With Qatari LNG constrained, the European Union has increased its dependence on US LNG , which now accounts for about 30% of its supplies. However, competition with Asia on the spot market makes it more difficult to secure additional volumes at stable prices, fueling further fluctuations.
Supply rate and outlook for 2027
The plan to halt Russian gas imports starting in January 2027 adds an element of uncertainty. In the absence of Russian supplies, Europe will have to rely primarily on LNG, especially from the United States. The need to replenish supplies before the following winter could keep prices high even if geopolitical tensions were to ease.
Impact on families, businesses and industrial sectors
Rising wholesale natural gas prices quickly translate into higher bills for residential and business consumers. The connection between the gas and electricity markets is particularly strong: during peak demand, gas-fired power plants fuel a large portion of electricity generation, driving up electricity costs.
Energy-intensive sectors, such as fertilizer production, chemicals, and steel, are already reporting production cuts to contain costs. Rising prices are compressing profit margins, potentially impacting Europe's competitiveness compared to regions with cheaper supplies.