European gas prices moved close to €70/MWh at the end of August after escalating conflict in the Middle East. The developments raised concerns about LNG supply from the Persian Gulf and increased competition risk between European and Asian buyers. The shift came as market participants reassessed the availability of flexible cargoes.
Dutch TTF rises to highest since January 2023
Front-month Dutch TTF traded around €69.90/MWh, up 4.4% from the previous close, according to the daily market report. The contract was at its highest level since January 2023.
The price increase followed renewed military escalation in the Gulf region. Market focus centred on potential disruption to Qatar and other LNG-exporting states.
Competition for flexible LNG cargoes tightens if Gulf supplies fall
A sustained reduction in Gulf LNG availability would tighten the pool of flexible cargoes available to buyers. That scenario would also raise pressure on European importers to compete more aggressively with Asian buyers. The balance between regional demand and supply flexibility is therefore sensitive to developments affecting Gulf exports.
EU storage levels and early September weather
The risk is amplified by relatively weak European inventories. EU gas storage was around 64.7% full, leaving the market more dependent on continued LNG arrivals during the remainder of the injection season.
Near-term weather is expected to provide some relief, with cooler conditions forecast for early September. The change should reduce power-sector and household gas demand compared with the previous heatwave period. Despite that, responsiveness to geopolitical developments is expected to remain high.
Implications for SEE power markets and carbon-linked costs
Gas markets are likely to stay sensitive because Europe is entering the final part of its winter storage-building period without the inventory cushion seen in some previous years. For SEE power markets, a sustained TTF price around or above €70/MWh would reinforce already-high gas-fired marginal generation costs.
With EU carbon prices above €80/t, the combination increases the probability that gas plants will continue setting expensive evening power prices across Hungary, Romania, Greece, and neighbouring markets.
