European Gas Prices Drop Amid Alternative Shipping Routes and Faster Inflation Impact
European and British wholesale gas prices continued their downward trend on Monday, dropping over 2% as evidence of alternative shipping routes around Persian Gulf choke points helped alleviate energy risk premia.
The benchmark European price fell 2.5% to trade at 77.55 euros per megawatt-hour (MWh), building on last week's multi-session pullback. In Great Britain, the equivalent price slid 2.91% to reach 192.36 pence per therm, anchoring near multi-week low watermarks.
The European Central Bank (ECB) warned that wholesale gas shocks now feed into inflation faster, with a fresh study highlighting how structural changes across European energy markets have amplified the speed at which wholesale price surges pass through to euro zone inflation. The ECB revealed that wholesale natural gas price changes will now feed into consumer gas inflation within 1 to 3 months in over half of euro area countries - a significant acceleration compared to 2022.
The findings add pressure on Frankfurt as headzone inflation remains above 3% and some economists project a rise toward 4% by year-end. Despite ongoing military activity in the region, commodity desks reported a steadily increasing volume of liquefied natural gas (LNG) tankers and crude carriers successfully finding alternative passage out of the Gulf.