EU energy ministers meet as gas hits highest since 2022

EU energy ministers are meeting in Luxembourg on Thursday, October 29, to discuss energy security before the winter heating season. The wars in Iran, Ukraine and Yemen have pushed oil and natural gas prices sharply higher, Reuters reported. The meeting comes a day after European wholesale gas prices briefly reached €100 per megawatt-hour on Wednesday, the first time since December 2022, when Europe was dealing with the loss of most of its Russian pipeline gas. Prices are now about triple their level before the Iran war, according to Reuters.uk.finance.yahoo.com

Prices at 2022 levels

Front-month futures on the Dutch TTF hub, Europe's main gas benchmark, reached €100.37/MWh on the afternoon of October 28, a daily gain of more than 4%, Fakti reported. That is still well below the record of about €340 set in August 2022. Higher gas prices have also lifted electricity costs, with wholesale power above €300/MWh in 15 European markets on Thursday, including Germany and Poland, according to Euro2day.euro2day.gr+1

Fighting has damaged refineries in the Middle East and Russia and disrupted oil and gas shipments through the Black Sea, the Red Sea and the Strait of Hormuz. Europe is entering winter with gas storage only 75% full, compared with 83% a year ago, according to Reuters and the European Commission.energy.ec.europa.eu+1

Refineries and demand cuts

On Wednesday, the Commission opened talks with European refineries on how to raise output, which could include relaxing some technical fuel specifications, Reuters reported. Energy Commissioner Dan Jørgensen said almost a quarter of Europe's refineries have closed in the past 20 years, cutting refining capacity by about 10%. He also said the global diesel market is expected to stay tight next year, the Bulgarian News Agency reported.bta.bg+1

Ministers will also consider a Commission proposal to lower electricity bills through changes to taxes and grid fees, such as taxing electricity at a lower rate than gas. Earlier this month, Western powers agreed to speed up the release of more than 400 million barrels of emergency oil stocks after pressure from Washington, according to RTÉ. Ireland holds the rotating EU Council presidency, and a paper it prepared asks whether the bloc should adopt EU-wide measures to cut demand if the Strait of Hormuz stays partly or fully closed, Euronews reported.rte.ie+1

Affordability over supply

Officials say the main risk is cost, not running out of gas. "We are in a very serious situation now. It does not look like we have a security of supply issue but I would warn against neglecting that," Jørgensen told reporters. He added that available supply means little to households and businesses that cannot afford it, RTÉ reported.rte.ie

Irish Energy Minister Darragh O'Brien, who is chairing the talks, said before the meeting that the EU has no "magic wand" to make high prices disappear, according to Ground News.ground.news