Gas prices in Europe drop below $500, first time since December

The price of gas in Europe dropped below $500 per 1,000 cubic metres, marking the first instance since December 27, 2024, that it has reached this level.

According to data from the London Stock Exchange, the price for February futures at the TTF hub in the Netherlands fell to $495.6 per 1,000 cubic metres, or €46 per MWh, based on the current euro-dollar exchange rate. The total decrease in price since the beginning of the day is approximately 2 per cent, Caliber.Az reports citing Russian media.

At the end of December, gas prices had risen in anticipation of the halt in Russian gas transit through Ukraine. However, following the cessation of Russian gas supplies, the price increase was modest, rising by just 1 per cent in the first trading session, although it remained at the highest level since November 15, 2023. After that, gas prices began to decline.

By the end of 2024, the average price of gas in Europe had decreased by 17 per cent, settling at around $387 per 1,000 cubic metres. Contributing factors to this decline include warmer-than-expected weather, high levels of gas storage, and stagnant demand for gas within the European Union.

Experts predict that gas prices in 2025 will rise across all major global markets, though prices are expected to decrease again in 2026-2027. In Europe, a moderate price increase is anticipated in the coming year, but the halt in Ukrainian transit is not expected to have a major impact on prices. A short-term increase of up to 10 per cent is the most likely scenario.

The agreement for the transit of Russian gas through Ukrainian territory expired on January 1, 2025, and had previously allowed for the pumping of 40 billion cubic metres annually. Ukraine’s decision not to extend the agreement left Gazprom without the technical and legal means to supply gas via this route, leading to a suspension of supplies on the morning of January 1.

Russian President Vladimir Putin stated that a new contract for the transit of gas through Ukraine was not possible, given the timing of the expiration. Kiev also confirmed its intention to cease transporting Russian gas.

However, Ukraine has expressed its willingness to resume gas transit through its pipeline system at the request of the European Commission, provided that the gas does not come from Russia.

By Vafa Guliyeva