Europe’s natural gas futures experienced a rally as Chevron stopped production in an Israeli gas field, potentially leading to supply shortages in the eastern Mediterranean region. The benchmark contract rose by as much as 14%, reaching its highest point in seven weeks. Chevron was asked to switch off the Tamar offshore natural gas platform due to security concerns following attacks by Hamas. However, supply from the Leviathan field continues, and Israel aims to direct more supplies to Europe, which is recovering from an energy crisis. Some of Israel’s gas is shipped to Egypt, which supplies fuel to Europe through two liquefied natural gas plants. However, Egypt has not yet resumed deliveries after a summer halt due to increased domestic demand.
In addition to the supply risks in the eastern Mediterranean, disruptions were also seen in Australia when workers at Chevron’s LNG plants resigned, potentially disrupting supplies and driving up prices. Elsewhere in Europe, a leak was discovered in an underwater pipeline in the Baltics, raising concerns about infrastructure security and supplies as winter approaches. Although the incident appears to have been contained, it underscores the vulnerability of underwater infrastructure and the potential for disruptions as the heating season begins in the northern hemisphere.
The rise in natural gas prices also impacted crude oil prices, which increased sharply following the deadly Hamas attacks. Additionally, electricity prices in Germany and the Netherlands rose, reflecting the surge in gas prices. Despite the concerns and rising prices, Europe’s gas supplies are near full capacity, and some experts suggest that energy prices may be overreacting to the current news.