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Peter Davis

An writer at FOMOdrive

  • Oct 11, 2023
  • 2 min read

Gas prices in Europe soared by 15%. Goldman Sachs recommends buying

The cost of gas in Europe has increased by 15%, reaching its highest level in three months.

Goldman Sachs has advised investors to purchase gas stocks in light of the current situation in Israel.

Production in the Middle Eastern country has been halted due to the intensification of the Palestinian-Israeli conflict.

Strikes have recommenced at LNG facilities in Australia.

On Tuesday, gas prices in Europe exceeded $500 per thousand cubic meters for the first time since August 22, with the day ending at a high of $540. This was a level that had been briefly seen in mid-June.

RBC reported that, in light of the intensifying Palestinian-Israeli conflict, Israel has suspended production at the Tamar gas field, a major source of energy for the country. This news was accompanied by a rise in the price of quotes.

Israel's main source of gas is the gas field located on the shelf of the Levant Sea. Additionally, some of this gas is exported to Egypt, which then supplies it to Europe as Liquefied Natural Gas (LNG).

On Sunday, October 8, the Balticconnector gas pipeline in the Baltic Sea was shut down due to a leak. Gasgrid, the Finnish operator, stated that repairs could take months.

On Monday, workers at two Chevron LNG plants in Australia resumed their strike, which could potentially disrupt 7% of the world's LNG supplies. This has increased the risk of supply disruptions in other areas.

Goldman Sachs suggests investing in gas, as the potential risks to European gas prices are likely to be higher due to the uncertain length of production disruptions and the geopolitical effects of the continuing Middle East conflict.

In the short term, growth in gas prices in Europe is restricted due to the high levels of reserves in underground gas storage facilities (97% of full capacity) and warm, windy weather.

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