Gas Prices Surge by Around 50% Amid Escalating Middle East War

Last week, Dutch power prices averaged 111.0 €/MWh, which was 36.1 €/MWh higher than the previous week. Prices remained above 100 €/MWh on almost all days except Monday. Wednesday had the highest baseload at 142.3 €/MWh, with prices reaching as high as 450 €/MWh for one PTU in the evening.

This price increase was driven by a combination of market fundamentals. The sharp rise in gas prices was the primary driver, compounded by lower wind generation. At the same time, strong solar output suppressed prices during daylight hours. However, this created steeper evening price spikes, as conventional power plants needed to start up to replace declining solar generation, introducing additional start-up costs.

Gas prices averaged 47.3 €/MWh, an increase of 16.3 €/MWh week-on-week. The rally was largely driven by growing supply risks linked to the escalating conflict in the Middle East, which disrupted LNG production and halted flows from key exporters such as Qatar. The closure and disruption of shipping routes through the Strait of Hormuz further intensified concerns over LNG availability. Europe also faced increasing competition from Asian buyers amid tightening global supply.