EU Considers Extending Natural Gas Price Cap Amid Middle East War Concerns

[Image source=Reuters Yonhap News]

The European Union (EU) is reportedly discussing whether to extend the natural gas price cap, which is set to be applied until February next year, according to foreign media on the 22nd (local time).

According to foreign media, EU officials are concerned that although energy prices have fallen and the EU's gas storage has reached an all-time high, the war between Israel and Palestinian Hamas and potential further infrastructure damage could affect supply this winter.

An EU diplomat said, "It is unclear how the situation in Israel will impact gas imports from the Middle East." He also expressed concern over the recent damage to the 77 km-long Baltic Connector underwater gas pipeline connecting Finland and Estonia earlier this month, adding, "It would be wise to take out insurance."

Following the reduction in supply from Russia after the Ukraine war, which caused a sharp rise in natural gas prices, the EU introduced a price cap with a one-year deadline starting February this year.

The cap is triggered immediately to suppress prices if the Dutch TTF futures market price exceeds 180 euros per megawatt-hour (MWh) and is 35 euros higher than the global liquefied natural gas (LNG) market price for three consecutive days.

Natural gas futures, which once surpassed 300 euros during the early summer of last year at the start of the Ukraine war, have steadily declined and are currently trading around 50 euros.

The EU plans to propose to member states next month whether to extend emergency energy measures, including the gas price cap and joint purchasing regulations, to gather opinions.

This content was produced with the assistance of AI translation services.