One Month of Iran War Drives European Energy Prices Higher
ISTANBUL:
The conflict between the U.S. and Israel and Iran, along with the closure of the Strait of Hormuz and Iran’s attacks on regional energy facilities, has shaken global energy markets. Europe’s reliance on natural gas imports from the Gulf, in some cases as high as 40%, has intensified concerns about supply security.
Sharp Surge in Gas Prices
From Feb. 28 to March 26, European gas prices surged significantly. April futures on the Dutch TTF hub rose 89.4% from €31.5 ($36.2) per megawatt-hour to €54.5. Prices climbed 81.8% in France, 78.9% in Spain, 77.4% in Belgium, 75.6% in the UK, and 74.1% in Germany. Other nations, including Austria, Czechia, Denmark, Finland, and the Baltics, saw increases between 41% and 71%.
Policymakers across the EU debated strategies to secure energy, mitigate rising costs, and stabilize the regional economy. Some countries reconsidered delaying the decommissioning of nuclear plants to maintain a reliable energy baseline.
Supply Risks in Southern and Eastern Europe
Andres Cala, an analyst at Montel, highlighted higher supply risks in southern and central Europe. While countries like Italy, France, and Spain could buy LNG on the spot market, Eastern Europe faces challenges due to competition, reduced Russian supplies, and tight LNG availability. Central European nations have already restricted oil products for some consumers, with supply shortages expected to spread.
Türkiye’s Strategic Role
Cala emphasized that Europe should leverage Türkiye’s energy hub potential to diversify supplies. Türkiye already supports Europe by absorbing volumes from Russia and Iran, transporting Azerbaijani gas, and reexporting LNG. Its Black Sea discoveries, totaling nearly 800 bcm, could increase domestic production from under 4 bcm in 2025 to 15–20 bcm by 2030.
The Akkuyu nuclear plant, with four reactors totaling 4.8 GW, will begin supplying electricity this year, eventually meeting around 10% of national demand. Türkiye has also expanded renewable capacity by nearly 50% since 2020, projected to reach 100 GW by 2030. Together, these developments could allow Europe access to spare gas supplies by 2030, provided domestic reforms remain on track.
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