European natural gas prices surpassed €100 per megawatt-hour for the first time in nearly four years amid escalating geopolitical tensions and concerns about a colder-than-usual winter in the region. Dutch gas contracts for November delivery rose 5 percent to €100.95 per MWh, reaching levels last seen in December 2022 during the energy crisis triggered by Russia’s invasion of Ukraine.
Market participants are responding to the possibility of renewed U.S. military action against Iran following the midterm elections scheduled for November 3. President Donald Trump has signaled that such strikes may occur, heightening fears of further disruptions to liquefied natural gas (LNG) shipments from the Middle East. These concerns coincide with forecasts predicting a harsh winter that would increase gas demand for heating across Europe.
The combination of potential supply constraints and increased consumption comes as Europe enters its peak demand season with lower-than-average gas storage levels. Energy consultancy Energy Aspects noted that LNG exports from Qatar, a major global supplier, could decline in November and December due to intensifying conflicts in the region after the elections.
Benchmark European gas prices have climbed 39 percent so far in October, with futures contracts for delivery beyond November also experiencing gains. The December gas price curve indicates that traders currently assign a 73 percent probability to a shortage of Middle Eastern LNG supplies this winter, a notable increase from 51 percent just a week prior.
In addition to supply risks, meteorologists have warned of a possible sudden stratospheric warming event—a rapid temperature rise in the polar stratosphere—that could trigger a surge of cold Arctic air into northern Europe as early as November. This weather pattern would significantly boost heating demand during the already precarious supply situation.
“Nobody really knows how cold or warm the [European] winter is going to be, I’m getting a lot of different assumptions,” said Anne-Sophie Corbeau, a gas analyst at Columbia University’s Center on Global Energy Policy. The uncertainty surrounding both geopolitical developments and weather forecasts has prompted traders to increase their activity in the options market to hedge against price volatility.
On Friday, trading volume for Dutch gas options on the Intercontinental Exchange hit 3 million contracts, marking the highest level since the market’s inception in 2013. This surge underscores growing caution among market participants amid an environment marked by supply threats and unpredictable climatic conditions.