2023-12-21 16:32:00
On Tuesday, December 19, the price of gas, for delivery in the first quarter of 2024, fell to 32.83 euros per MWh, on the Rotterdam futures market (Dutch TTF). We haven’t seen such a price for over two years. The ICIS consultant emphasizes that this drop in gas prices came despite “concerns regarding the supply of liquefied natural gas (LNG) through the Red Sea”.
As a reminder, a series of attacks carried out by Houthi rebels, supported by Iran, pushed many boats to flee the Red Sea, particularly the very risky Bab el-Mandeb Strait. However, around 10% of global maritime trade passes through this highly strategic strait.
Additionally, according to the U.S. Energy Information Administration (EIA), approximately 12% of oil traded by ships worldwide transited the Red Sea in the first half of 2023. In addition, 8% of liquefied natural gas (LNG) traded worldwide passed through this region.
Only 5% of European supply
However, the attacks in the Red Sea did not cause gas prices to soar in Europe. How to explain this? According to Tom Marzec-Manser, gas analyst at ICIS, Europe’s dependence on liquefied natural gas arriving via the Red Sea must be put into perspective. “Qatar is the only major supplier that transports LNG to the EU and the United Kingdom via the Bab el-Mandab Strait,” he explains. But Qatar only represented 5% of Europe’s gas supply during the first 11 months of 2023. The vast majority of LNG supplying the European market arrives via the Atlantic Ocean, particularly from the United States, adds the analyst.
Furthermore, according to the consultant ICIS, the price of gas might fall further next year. “Demand remains structurally weak in Europe,” explains Tom Marzec-Manser. This should put downward pressure on gas prices.”
The Red Sea nevertheless remains an important supply route for oil on the European market.
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