The Benchmark front-month contract at the Dutch TTF gas hub TRNLTTFMc1 hit its highest intraday level in over ten months on Thursday, as the market remained nervous over potential supply disruptions due to geopolitical tensions in the Middle East and fighting between Russia and Ukraine.

The contract for November delivery hit 42.57 euros per megawatt hour (euros/MWh) at 0945 GMT, its highest intraday level since Dec. 1, according to LSEG data. It then receeded to 42.40 euros/MWh by 1121 GMT.

“Geopolitical risk premium is a main reason behind the rise,” one trading source said.

The price is still much lower compared to its all-time high in August 2022 of 306.00 euros/MWh, when gas prices spiked due to Russia’s invasion of Ukraine and a drop in Russian pipeline gas supply.

In the Middle East, an exchange of heavy fire between Israel and Hezbollah heightened supply concerns, as Israeli strikes also hit the Syrian capital Damascus early on Thursday, Syrian state media reported.

Any disruption of Israeli gas to Egypt would force the latter to seek more cargoes of liquefied natural gas (LNG) and compete with Europe for the molecules amid tight supply.

Meanwhile, market players are also concerned over supply of LNG from Qatar and UAE if tensions with Iran led to the closure of the strait of Hormuz, the main route to ship gas from the two gulf countries to the world.

On Wednesday, the United States said for the first time it had seen evidence North Korea has sent 3,000 troops to Russia for possible deployment in Ukraine, a move that could mark a significant escalation in Russia’s war against its neighbour.

Any disruption to the remaining Russian pipeline supply to Europe and to Ukraine’s gas infrastructure could disrupt Europe’s conformable gas balance and push it to compete with Asia for LNG.
Source: Reuters (Reporting by Marwa Rashad; Editing by Nina Chestney)