Europe’s benchmark natural gas contract briefly touched €100 per megawatt hour (MWh) on Wednesday as disruptions to Middle East shipping of liquefied natural gas keep supply tight ahead of winter and consumers and industry feel the pinch from high energy prices.

Prices have been rising to 2022 highs as the conflict in the Middle East has escalated, and are now trading at around triple pre-Iran war levels.

The US-led war on Iran has raised costs for oil, transport fuels, gas, electricity and food. Analysts and industry forecasters foresee at least another year of high gas prices even if the war is resolved and winter proves mild, as Europe will need to restock gas storage reserves depleted to record lows.

The Dutch front-month contract at the TTF hub briefly traded at €100 per MWh at around 1335 GMT, up around 4% from the previous session, data from the Intercontinental Exchange showed.

High wholesale gas prices are filtering through to consumer and industry gas and power bills, with natural gas-fired plants typically setting the price for electricity during the periods of highest demand. The German front-year baseload contract rose 1.7% to 159.30/MWh, the highest since June 2023 while the French equivalent was at a near two-year high of 122.50/MWh.

Europe has entered the heating season, when demand is usually higher, with gas storage at nearly 75% full and Germany’s at around 60%, significantly below last year.

“As winter approaches, Europe has less of a storage cushion than needed and fewer options to quickly replace disrupted supply. The continent’s LNG imports were 30% below last year for the week ending 9 October, and while mild weather has kept heating demand subdued, temperatures alone can’t reverse the vulnerability faced by the continent,” said Mathieu Utting, gas and LNG analyst at Rystad Energy.

Norwegian gas producer Equinor’s CEO said on Wednesday that Europe could face another spike in gas prices if cold weather boosts demand later this winter.

The highest peak of TTF gas was around €340 in August 2022, so although the current crisis has not sent prices that high yet, the €100 level is still significant enough for energy intensive industries and consumer bills will also be impacted.

Sectors such as chemicals, fertilisers and steel depend on gas as a fuel or raw material and some companies have reduced output. Many of them buy at or near wholesale prices so the cost impact is immediate.

For consumers, retail contracts lag wholesale prices, so most of the hit to bills comes in 2027. In Britain, bills are set to rise again in January and German gas tariffs for new customers are up 55% already this year.

European Union governments have spent €17.9 billion this year to cushion the effects of more expensive oil and gas on households and firms, the European Commission said in a note.

Source: Euronext reported by Nina Chestney and Nora Buli, edited by Emelia Sithole-Matarise and Nick Zieminski