Investing.com – European prices vaulted to their highest levels in more than two weeks on Wednesday after Iran abruptly boycotted scheduled peace talks with U.S. envoys in Doha, shattering hopes for a swift diplomatic resolution to the Middle East conflict.
The benchmark jumped to 43.80 euros per megawatt-hour, its highest mark since June 15. In tandem, the followed suit, spiking to a two-week peak of 104.8 pence per therm.
The sudden price surge underscores the extreme vulnerability of the European energy market to geopolitical fractures.
Traders had aggressively priced in a risk premium earlier this year when regional gas prices shot up over 40% following the outbreak of the U.S.–Iran war and the subsequent disruption of the Strait of Hormuz – a crucial transit chokepoint responsible for a fifth of the world’s liquefied natural gas (LNG) traffic, primarily out of Qatar.
While energy markets had spent recent weeks dialling back those anxieties as tentative shipping traffic resumed through the strait, diplomatic breakdowns caught the market off-guard.
Tehran’s refusal to sit down with the U.S. delegation in Doha could cast a shadow over the durability of recent de-escalation efforts.
With European storage refilling ahead of winter, any prolonged threat to Middle Eastern LNG infrastructure or transit routes risks reigniting the volatile supply crunches that have haunted European utilities over the last quarter.