European Gas Prices Slide as Alternate Shipping Routes Ease Energy Fears

European and British wholesale gas prices continued their downward trend on Monday, dropping over 2% as evidence of alternative shipping routes around Persian Gulf chokepoints helped alleviate energy risk premia. The benchmark Dutch front-month contract fell 2.5% to trade at 77.55 euros per megawatt-hour (MWh), while the equivalent wholesale gas contract in Great Britain slid 2.91% to reach 192.36 pence per therm, nearing multi-week low watermarks.

The European Central Bank (ECB) released an Economic Bulletin on Monday that revealed structural changes across European energy markets have accelerated the speed at which wholesale price surges pass through to euro zone inflation. According to the study, wholesale natural gas price changes will now feed into consumer gas inflation within 1 to 3 months in over half of euro area countries.

The share of euro zone countries with slow pass-through timelines (13 to 24 months) has plummeted from roughly 40% to just 5% since 2022, driven by post-crisis market liberalisation and more flexible pricing structures. The ECB also noted that electricity prices are now less responsive to natural gas swings than in past cycles due to expanding renewable power generation.