The sharp decline in natural gas prices in Europe: causes and consequences

European natural gas prices are vulnerable to external influences, and one of them is the development of the situation around strikes at Australian liquefied natural gas (LNG) facilities. These strikes could affect the supply of LNG from Australia, one of the world's largest producers of this type of energy. This situation led to a sharp decline in prices.

It all started with an 18% drop in prices for benchmark natural gas futures, but later the situation stabilized and the drop was 11%. However, the results of the negotiations have not yet been announced, and traders are waiting for updates. If there is no progress, strikes may resume as early as September 2.

It is important to note that this situation poses a risk of disruption to global LNG exports. A large volume of this fuel is used for both domestic and international consumption. If the supply of LNG from Australia is disrupted, it could affect prices in the Asian and European regions.

Although European natural gas prices are already lower than last winter, the market is still on edge following the events that followed Russia's invasion of Ukraine last year. This creates uncertainty about supply and possible changes in the regional energy market.

According to the latest BloombergNEF data, US LNG exports have become a more profitable supply route to Europe, especially in October, November and December, compared to Asia. This could help ease concerns about possible gas supply problems in Europe and provide greater stability in the market.