The price of natural gas in the UK has surged by nearly 25% following the recent attacks by Iran on a major gas hub in Qatar, raising concerns about significant disruptions to global supplies.
In recent days, natural gas futures, which are contracts for purchasing the commodity in the coming months, have been trading between 125p and 132p per therm (a unit of heat energy). However, prices rose sharply to around 140p on Wednesday.
When trading opened on Thursday, prices spiked to 174p, marking a 24% increase, before easing slightly to 169p as of 8 AM GMT.
Britain imports a considerable portion of its natural gas, and after a cold winter, Europe is expected to have lower-than-usual reserves.
Government data from 2024 shows that natural gas accounted for approximately one-third (33%) of the UK’s overall energy supply. Although this share may be slightly lower now due to the expansion of renewable energy sources—which accounted for 42% of the total—the UK remains heavily reliant on gas.
While there is domestic production from the North Sea, Britain also imports significant volumes from Norway and other parts of Europe. On Thursday, European gas prices also increased by more than 20%.
Commenting on the broader surge in energy costs, Chris Bryant described the situation as a “really big moment for the UK economy” and called for renewed efforts to accelerate the transition to green energy to reduce reliance on volatile fossil fuel markets.
Bryant said that Chancellor Rachel Reeves “will look at what we can do about the fuel duty cap.”
He added: “The biggest message I take away from everything that’s happening in the Gulf is, we need to make sure that we are not so dependent on oil and gas prices,” he said.
“The key part of that is making sure that we transition the UK economy to renewables.
“In ten years’ time, I think people will say this was a really big moment for the UK economy and the UK Labour government got it right.”
Susannah Streeter, the chief investment strategist at Wealth Club, said: “Fears of a sustained energy shock have resurfaced after the escalation in the Iran war sent oil and gas prices soaring.
“The prospect of a longer, more drawn-out conflict is in sharp focus, as both sides ratchet up attacks on energy infrastructure. Downbeat sentiment is spreading fast, with London’s Footsie opening around one per cent lower as investors assess the repercussions for the global economy.
Brent crude remains highly volatile but has traded as high as $114 a barrel today, threatening to climb back towards recent scorching levels. Gas prices have surged by 25 per cent, reaching a range not seen since early January 2023.
“Warnings that oil could reach $150 a barrel have resurfaced. Israel’s attack on Iran’s gas fields has prompted retaliatory strikes on facilities in Qatar. Europe in particular is reliant on LNG exports from Qatar, as countries have been weaning themselves off dependence on Russia.”
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