Gas Prices Soar as Saudi Pipeline Remains Shut and Hormuz Meeting Postponed
The price of natural gas in Europe has reached its highest level since January 2023, rising by over 5 percent to 84 euros per megawatt hour (MWh) on Monday. This surge is largely due to two supply shocks that have weakened at once.
The first shock is the continued closure of Saudi Arabia's East-West pipeline, which was shut down as a precaution after a drone attack from Iraq. The pipeline carries approximately 4-5 million barrels per day (bpd), accounting for around 4-5 percent of global supply.
The second shock is the postponement of a meeting between Iran and Gulf states on managing navigation through the Strait of Hormuz, which was scheduled to take place in Oman. This has led to a significant decrease in vessel transits, with only single-digit numbers recorded over the weekend.
As a result, Brent crude prices have risen by 2.91 percent to 107.65 dollars per barrel, while European inflation concerns are being revived.