European Gas Prices Climb to Highest Level Since 2022 as Winter Supply Worries Mount

European wholesale gas prices have climbed to levels last seen in 2022, as concern deepens over the continent's winter supplies and the ongoing conflict in the Middle East.

Prices reached €97 (£81) a megawatt-hour on Monday. Temperatures fell across Europe, and traders factored in stronger demand for heating.

In the UK, the month-ahead contract rose by 4% to 240p a therm. That is its highest point since December 2022, when prices were surging after Russia's full-scale invasion of Ukraine.

Markets are also reacting to fears of further supply disruption in the Middle East. Reports say the US and Israel have drawn up plans for renewed strikes against Iran after the US midterm elections. Those reports helped push oil as high as $117 a barrel on Friday. The international Brent crude benchmark eased about 2% on Monday but remains above $114 a barrel.

Europe is entering winter with its gas stores at their lowest level in more than a decade. A slowdown in exports from Qatar and higher summer consumption, used to power refrigeration and cooling, both contributed. Storage is now about 75% full, compared with a seasonal average closer to 80%.

Britain's energy regulators have said the country is expected to face some of the highest energy costs in Europe this winter because it relies on imports to keep supplies steady. The UK has some of the smallest gas stores in Europe, after decades of depending on homegrown production from the North Sea.

Figures from the Office for National Statistics show the UK spent a record £4bn on power imports in the year to August. Half of that went on electricity imported from France. Over the past year the country has also made near-record payments to start up gas plants, while wind and solar farms were paid to switch off because of bottlenecks in the grid.

British households are bracing for higher bills. Energy costs are predicted to rise 16% in January, bringing the typical annual dual fuel bill to the equivalent of about £2,000.

Stock markets edged up on Monday as the softer oil price offered some relief. The Stoxx Europe 600, which tracks the continent's largest companies, gained 0.3% in early trading, while the UK's FTSE 100 rose by 0.4%.