Expert analysis
Developments over the past week once again highlighted how sensitive European energy markets remain to disruptions in global supply chains. The escalation of the Middle East conflict, the outage of Qatari LNG supply and broader supply uncertainties in Europe together triggered significant volatility across gas, carbon and coal markets, with these developments quickly feeding through into electricity prices as well.
Gas Market: Geopolitical Tensions and Supply Disruptions Drive Prices Higher
European gas markets experienced pronounced volatility following the escalation of the Middle East conflict. The TTF front-month contract surged by more than 30% at the beginning of the week, briefly climbing towards 68 EUR/MWh, bringing European gas prices close to a three-year high.
The market reaction was primarily driven by growing uncertainty around global LNG supply. Disruptions around the Strait of Hormuz are particularly sensitive for markets, as roughly one-fifth of global LNG and oil trade passes through this route. The shutdown of Qatari LNG production and disruptions in maritime transport therefore created a global supply shock for the gas market within a very short period.
Market participants are increasingly focusing on the duration of the disruption. Current information suggests that the restart of Qatari LNG exports could take weeks or even months, further increasing uncertainty regarding European supply.
Supply concerns were further amplified by smaller disruptions within Europe. A compressor failure at Norway’s Nyhamna gas processing plant temporarily reduced gas flows to Europe by around 20 mcm per day.
Supply risks are expected to persist in the coming months. Seasonal maintenance at Norwegian gas fields typically takes place in May–June, temporarily reducing pipeline flows to Europe. Combined with the current LNG market uncertainty, this could further tighten the European gas balance heading into the summer period.
Carbon Market: Fuel Switching Supports EUA Prices
Despite the volatility in gas markets, the European carbon market remained relatively stable. The December 2026 EUA contract traded around 70 EUR/t during the week, briefly reaching a weekly high of around 74.8 EUR/t on Tuesday.
The upward price momentum was largely supported by changes in the energy mix. Rising gas prices have once again improved the competitiveness of coal-fired generation in several markets, increasing emissions and therefore demand for carbon allowances.
Higher gas prices significantly weakened the competitiveness of gas-fired power generation (clean spark spreads), while margins for coal-fired generation (clean dark spreads) improved. This partially shifted the merit order back toward coal generation, leading to higher emissions and increased demand for EU ETS allowances.
As a result, the gas market shock did not only affect natural gas prices, but also triggered a rapid adjustment across the coal and carbon markets through changes in the power generation mix.
Coal Market: Higher Gas Prices Boost Coal Competitiveness
The rise in gas prices quickly spilled over into coal markets as well. The European API2 front-month coal contract traded around 140 USD/t at the beginning of the week after reaching levels close to a three-year high the previous week.
Higher gas prices significantly improved the economics of coal-fired power generation. Calculations of German power generation margins showed coal-fired plants returning to positive territory, while gas-fired generation remained unprofitable in several markets.
This dynamic could increase short-term demand for coal, reinforcing the shift among fossil fuels within the European energy mix.
Hungarian Power Market: International Price Movements Quickly Feed Through
The domino effect of the gas market shock quickly reached the Hungarian electricity market as well. HUPX day-ahead prices have fluctuated within a 100–140 EUR/MWh range in recent days, while month-ahead Hungarian power prices traded around 100 EUR/MWh.
Regional fundamentals are partly offsetting the price increases. Hydropower generation remains strong in South-Eastern Europe, increasing the share of low-marginal-cost electricity in the system and creating export opportunities toward Central European markets.
At the same time, solar generation is increasing as the spring season progresses, raising the share of renewable energy in the power mix. During daytime hours this can put downward pressure on electricity prices across several markets.
Looking ahead, developments in the Middle East conflict and the timing of the restart of Qatari LNG exports will remain key drivers of European energy markets in the coming weeks. Market participants are also increasingly focusing on summer fundamentals, including the Norwegian maintenance season, the pace of gas storage injections and the evolution of regional renewable generation.
Source: Montel Analytics; LSEG Data & Analytics; ICE
Analysis written by: Szabó-Weichelt Petra
09.03.2026.