The price of gas in Europe soared 35% this Thursday, following attacks on energy infrastructure in the Middle East, in particular an Iranian attack on the largest liquefied natural gas (LNG) production facility in the world, in Qatar.
Shortly after trading began at 7am today (6am Lisbon), the Dutch TTF futures contract, considered the European benchmark, rose 28.06% to 70 euros per megawatt-hour, after previously rising 35%.
This hours after the Qatar state energy company reported “considerable damage” to Ras Laffan gas complexfollowing new missile attacks on this crucial location, fueling fears about international energy supplies.
However, the Iran intensified attacks on energy infrastructure of the Gulf countriessetting fire to Qatari LNG facilities and two Kuwaiti oil refineries.
This Thursday morning, a drone attack also hit even one of Kuwait’s largest refineriescausing a fire in one of its units, according to state media.
However, This escalation began with an attack from Israel to the field of South Pars (Iran)which is responsible for 70% of Iran’s natural gas supply.
Inflation will increase in the short term
Oil prices also rosealso influenced by developments in the conflict in the Middle East, with Brent oil rising by more than 5%, reaching around 113 dollars.
Furthermore, the barrel of Brent oil for delivery in May shoots more than 10% today, approaching 120 dollars.
The main European stock markets opened sharply lower due to the rise in oil prices following attacks on energy infrastructure in the Middle East, and the lack of expectations of rate cuts by the US Federal Reserve (FED).
The rise in energy prices, due to the war in the Middle East, will increase inflation “in the short term”, said the president of the FED, Jerome Powell.
“The repercussions of events in the Middle East on the American economy are uncertain. In the short term, rising energy prices will drive up inflation global”, he stated at a press conference, after the meeting of the Federal Open Market Committee (FOMC).
Strengthening energy security is crucial
The President of the European Council, Antonio Costahighlighted that strengthening the Energy security is fundamental to EU security.
“It is very clear, with this situation in Iran, that the only good way to have stable prices and not depend on others and reinforce our energy security, is invest more and more in the energy transitionbecause it is the only way we can depend on our own energy and this is fundamental for our security”, Costa told Portuguese journalists at the entrance to the European summit in Brussels.
“We have to integrate telecommunications, we have to pursue our simplification agenda, we have to look at the strategic issue of energy prices”he also said, at a time when the conflict in Iran caused sharp rises in energy prices.
The Prime Minister, Luis Montenegrosaid he hoped that at Thursday’s European Council it would be possible adopt “a guiding framework” for crises energy sources, which may trigger the European crisis management mechanism or by allow an exceptional state aid regime.
This Thursday, at the entrance to the European Council, Bart De Weverthe Belgian Prime Minister, stated that “Europe is in trouble”.
