European gas prices hit highest since 2022 crisis after Saudi pipeline shutdown

European natural gas prices jumped roughly 6% at Monday's market open, pushing Dutch TTF futures to around €84 per megawatt-hour — levels not seen since the 2022 energy crisis — as the fallout from a Saudi pipeline shutdown and broader Middle East turmoil tightened an already strained energy market heading into winter.cryptobriefing+1

A Pipeline Under Fire

The immediate catalyst was Saudi Arabia's decision to shut down its East-West crude oil pipeline, a 1,200-kilometer conduit that carries oil from the Abqaiq oilfield to the Red Sea port of Yanbu. The kingdom closed the pipeline as a precaution after drone attacks struck it in the Riyadh and Medina regions on Thursday, causing fires, some damage, and several injuries, according to CNBC and Reuters. Both Riyadh and Baghdad said the drones were launched from Iraq, where Iranian-backed militias operate.cnbc+2

The pipeline, which has a capacity of 7 million barrels per day, had become a critical workaround for Saudi exports as the U.S. and Iran continue to contest control over the Strait of Hormuz. With that bypass now offline, oil markets surged in tandem: Brent crude topped $108 a barrel on Monday, up roughly 20% since the start of September, while WTI crude rose above $103.investinglive+2

Winter Storage Gap Deepens Concern

Europe's vulnerability to the disruption is compounded by below-average gas inventories. EU gas storage stood at 68% full as of September 12 — more than 16 points below the five-year average for the date. After the 2022 crisis, EU member states had set ambitious storage targets, but this year's buffer looks considerably thinner. The International Energy Agency has urged emergency measures and demand-side strategies to manage the situation.voltstack+1

LNG shipments, which became Europe's lifeline after Russian pipeline flows collapsed in 2022, are particularly exposed to disruptions in the Gulf. Any escalation that narrows tanker traffic corridors or forces rerouting adds cost and delay to a stretched supply chain.cryptobriefing

Inflation Fears and Rate Hike Bets

Rising energy costs are reverberating across financial markets. Fed rate hike odds have jumped to nearly 90% ahead of Wednesday's Federal Open Market Committee decision, with 10-year Treasury yields hovering near 5%. The DAX fell 0.4% and the CAC 40 dropped 0.6%, while S&P 500 futures slid 0.6%.investinglive

For the European Central Bank, a sustained energy price shock could complicate its delicate path of gradually easing monetary policy as inflation had been retreating from post-2022 peaks. Patrick Munnelly, market strategist at Tickmill Group, told MarketWatch News Corp ↗ 3.58% that President Donald Trump's suggestion the conflict in Iran could stretch beyond the November midterm elections, continued Houthi attacks on Saudi infrastructure, and an already tight crude market have all driven the risk premium higher.morningstar+1