European gas prices rose sharply on Wednesday due to fears of an escalation of the war in Gaza. US strikes on Iraqi targets and new attacks launched by Houthi militants on ships in the Red Sea have increased the risk of a broader conflict in the Middle East.
Although the diversion of ships has not yet had a significant impact on gas supplies, the market remains highly alert to threats to key transit routes for fuel exports. Some LNG shipments have already changed course and are taking longer to avoid the Red Sea, Bloomberg data showed.
On the leading gas exchange in Amsterdam, the price for January delivery rose more than 7 percent on Wednesday morning to 36.70 euros per megawatt hour.
However, despite ongoing geopolitical tensions, the price of gas has still fallen by more than 50 percent this year. This is due to high inventories and relatively moderate demand for fuel. Confidence in Europe's ability to withstand this heat season remains high.
The weather is expected to remain mild across much of Europe until early January, keeping heating gas demand low for the time being. Some countries also replenish their supplies over Christmas. Germany, Austria, Belgium and Denmark were among the countries that saw a marginal net increase in gas supplies last Monday, according to data from the European Gas Infrastructure Foundation.
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