European wholesale gas prices jumped to their highest level since 2022 on Monday, closing at €97 (£81) a megawatt-hour as temperatures across the continent fell and market participants factored in increased demand for heating.
Drivers of the rally
Traders said the move reflected a combination of near-term weather-driven demand and mounting geopolitical concerns. Reports that the United States and Israel have discussed plans that could involve strikes on Iran fuelled fears of further disruption to energy supplies originating in or transiting through the Middle East, although such reports have not led to confirmed military action.
Market consequences
The spike has heightened worries about winter energy security in Europe and raises the prospect of upward pressure on household and industrial heating costs. Market analysts said the rally underlines how sensitive European gas markets remain to both weather swings and geopolitical shocks.
Outlook
Going forward, prices are likely to remain sensitive to short-term weather forecasts, storage levels and any new developments in the Middle East. Traders and policymakers will be watching for changes in supply flows and for signals from governments seeking to shield consumers from higher bills.
The move to €97 a megawatt-hour marks a notable peak for the region’s gas market and serves as a reminder of the interconnected risks—climatic and geopolitical—that can quickly reshape energy prices ahead of the winter season.