European wholesale gas prices experienced a significant spike of 25% on Wednesday, raising concerns about potential increases in household and business utility bills later in the year. This sudden surge in prices can be attributed to fears regarding the supply of liquefied natural gas (LNG) from Australia, which is currently under threat due to a strike vote. Despite the rapid filling of European storage levels for the upcoming winter, the price of wholesale gas for delivery next month rose by 25% to €39 per megawatt hour. Additionally, the price of wholesale gas for delivery in December reached €51.75.
Last year, price hikes in the European gas markets raised concerns within the European Commission. The prices of Irish wholesale gas, which primarily come from the North Sea, are influenced by the UK futures market, which is, in turn, influenced by the continental European market. As a result, British prices also experienced a significant increase of up to 30%.
The strike vote by workers at Chevron and Woodside Energy facilities in Australia has the potential to disrupt LNG exports from the country, consequently tightening the global market for this fuel. However, the exact timing of the potential industrial action remains unclear at this stage.
It is important to note that these price increases and concerns about the supply of LNG from Australia have the potential to impact household and business utility bills in the future. The European wholesale gas market is closely interconnected, and any disruptions in one region can have ripple effects across the continent. As such, it is essential to monitor the situation closely and assess its implications for consumers and businesses alike.
Additional reporting by Bloomberg.