end of aid
The war between Israel and Gaza has shifted attention back to energy markets. Oil and gas prices have climbed since the week began, with Brent crude rising as a European benchmark to about 89.50 dollars a barrel, up from 84.25 at the close last Friday. In Europe, the Dutch TTF gas price surged roughly 40 percent, reaching around 53 euros per megawatt hour.
Analysts note that a segment of the gas supply pipeline in Finland has broken away from normal operations and may not be fully functional until early 2024. The disruption could help explain a two-week downturn in energy prices that preceded this rebound.
The price movement has translated into higher electricity costs as well. Gas plays a central role in shaping wholesale electricity prices, especially in markets where generation is dominated by combined-cycle gas turbines or hydro plants. The latest figures show the price of electricity climbing during the week, with a Saturday settlement near 135.13 euros per MWh, marking the highest level seen since the start of March.
Energy analysts warn that the trend is linked to broader global factors. The International Energy Agency has cautioned that prices may rise in the coming months as the energy balance tightens. In particular, there is concern about potential price volatility during a cold winter. Europe’s gas storage facilities have entered the heating season at about 96 percent capacity, which does not guarantee stability should weather turn unusually harsh.
end of aid
To prevent price slippage in gas and electricity, policy makers introduced what was called a gas cap. The cap initially set a ceiling of 40 euros per MWh for the raw fuel used by power plants but has drifted higher in recent weeks, currently around 62.8 euros per MWh.
Additionally, state interventions altered the economics of bills in several ways. Tax measures included a reduced value-added tax rate on electricity, a lowered electricity special tax, and the suspension of a portion of the electricity production tax. Such steps aimed to ease costs for regulated gas customers, yet uncertainty persists as to whether these reliefs will continue beyond the end of the year.
different stages
Electricity prices have remained elevated since the government implemented most austerity measures in mid-2021. The period of initial relief saw averages around 83 euros per MWh, rising to about 112 euros per MWh in October. A decision to lower the overall revenue by increasing VAT from 21 percent to 10 percent and to suspend some production taxes also influenced the trajectory of costs.
The gas market has followed a distinct path. Around mid-June 2022, prices hovered near 80 euros per MWh. When the VAT relief was announced in September 2022, prices surged to well over 200 euros per MWh, reflecting strong sensitivity to fiscal policy and monthly energy balances.