Expert analysis
The Market Is No Longer Pricing Events, but Duration
Recent geopolitical developments have triggered significant reactions across energy markets. However, current price movements clearly indicate that investors are no longer focused solely on the events themselves. The key question now is how long uncertainty will persist and to what extent global supply chains may be disrupted.
Energy price dynamics suggest that markets are increasingly pricing in prolonged risks rather than short-term shocks.
Natural Gas: Extreme Price Movements and Record Volumes
The European natural gas market has experienced extraordinary volatility in recent days. The front-month TTF contract rose by nearly 75% within just two trading sessions. From €31.95/MWh on Friday, prices climbed to around €55.92/MWh by Tuesday, reaching an intraday high of €65.79/MWh — a level not seen since January 2023.
Market participants are no longer pricing only immediate supply disruptions, but also the possibility of more sustained disturbances in LNG supply.
The Persian Gulf region plays a critical role in global LNG trade. Approximately 8–10% of Europe’s LNG imports are indirectly linked to this region. If Asia were to lose significant Qatari volumes, it would likely bid more aggressively for U.S. LNG cargoes, further intensifying global price competition.
In the event of a disruption lasting around one month, Europe could lose as much as 5.5 million tons of LNG supply. This would occur at a sensitive time, as EU gas storage levels currently stand at approximately 30%. While milder weather conditions and relatively strong global LNG inventories provide partial relief, structural vulnerability remains.
Uncertainty is further reflected in trading activity: according to ICE Endex data, front-month TTF contract volumes have reached record highs. Elevated trading volumes indicate that market participants are actively hedging positions and managing risk exposure.
Power Markets: Gas as the Dominant Driver
The sharp increase in natural gas prices has immediately spilled over into electricity markets. The Hungarian front-month power contract rose by nearly 50% week-on-week, stabilizing around €114/MWh.
On the spot market, the HUPX DAM price climbed to €142.64/MWh, representing a 32% weekly increase. Second-quarter and Cal 27 products also posted significant gains.
Although several mitigating factors are present in the region — including above-average temperatures reducing heating demand and hydropower generation running approximately 2.9 GW above seasonal norms — natural gas remains the primary price-setting factor in the current market structure. Solar generation may exceed average levels by 1.2–1.5 GW, but these supportive elements have so far been insufficient to offset the impact of the gas price surge.
CO₂ and Coal: Shifting Hedging Dynamics
Emission allowance markets have also moved higher. The December 2026 EUA contract strengthened to €73.93/ton. Coal prices have surged as well, as fuel-switching economics shift rapidly in response to rising gas prices.
The API 2 front-month contract climbed above $138/ton, having previously reached $147.50/ton. As a result, hedging strategies have adjusted quickly, contributing to elevated overall market volatility.
Oil: A Persistent Risk Premium
Geopolitical risks are also visible in oil markets. Brent crude has risen close to $80 per barrel, while West Texas Intermediate (WTI) has also posted significant gains.
Even in the event of a ceasefire, it is likely that a risk premium – albeit gradually declining – will remain embedded in prices for the remainder of the year.
Time Horizon: The Decisive Factor for the Weeks Ahead
Under current conditions, markets are primarily pricing the duration of disruptions rather than their intensity. A short-lived interruption of one to two weeks could allow consolidation in the €40–50/MWh range. However, a disruption lasting around one month could push prices above €60–75/MWh. In the case of prolonged LNG supply issues, structural repricing may occur, potentially driving gas prices above €90/MWh.
In our expert team’s view, the key question in the coming weeks will not be whether further incidents occur, but how quickly and to what extent uncertainty in global LNG trade can ease. Current energy price movements clearly indicate that markets are pricing prolonged risk, and its impact extends across the entire energy complex.
Source: Montel Analytics; LSEG Data & Analytics
Analysis written by: Tóth Eszter Lilla
04.03.2026.