London Daily

Focus on the big picture.
Wednesday, Nov 04, 2026

UK gas costs surge due to Europe supply crunch and market expert predicts worse to come

UK gas costs surge due to Europe supply crunch and market expert predicts worse to come

The UK has been exporting gas to the continent at maximum capacity and is currently not witnessing the wholesale prices seen over the North Sea and Channel, but that may not last much longer.

Growing fears Russia may switch off supplies of natural gas to Europe have pushed UK wholesale prices to levels last seen in the early days of the war in Ukraine, with a market expert telling Sky News there is worse to come.

The contract for next-month UK delivery was more than 12% higher at one stage on Wednesday after flows from the Nord Stream 1 pipeline, which provides more than a third of Russian gas to the EU, were cut to 20% of capacity from 40%.

The move, blamed by state-owned Gazprom on maintenance delays, has exacerbated fears that the bloc's reliance on Russian gas is being used as a weapon by the Kremlin in revenge for Western sanctions over the Ukraine invasion.

The Kremlin has cited sanctions-driven technical issues with equipment preventing Gazprom from exporting more.

While Russian gas only accounts for 4% of UK supplies traditionally, a lack of storage combined with many other factors including stable North Sea output during the warm months of low demand has allowed the country to help its neighbours on the continent by exporting gas at record volumes.


Nevertheless, UK wholesale prices for August have been rising sharply for more than a week and were hovering just below 400p a therm - last seen in March - in volatile trading early on Wednesday from a figure nearer 360p the previous day.

The main North European price was up by €26.18 to €222.50 per megawatt hour.

When measures of UK and European costs are compared, it shows the UK wholesale price was about 30% lower than its continental counterpart.


The price gap will soon close


Tom Marzec-Manser, head of gas analytics at commodities specialist ICIS, said of the difference: "British gas prices remain at a discount with those on the continent… as Britain is oversupplied with LNG (liquified natural gas) arrivals and cannot export surplus volumes to the European mainland at quick enough rates.

"Britain only has a small amount of gas storage capacity, too, so much of the arriving surplus cannot be stored in reserve for winter."

He said the lack of storage meant there would be a price consequence ahead: "ICIS data show the gas market expect the discount held by British wholesale prices will evaporate as winter begins and demand rises."

There were already signs of rising prices ahead as the UK wholesale price for October delivery rose 30% to 490p on Wednesday despite being far less exposed to the supply crunch.

Data shows European stocks at just 66% of capacity ahead of winter and the EU has responded with a voluntary plan for member states to curb gas use by 15% in a bid to prevent costly outages including factory shutdowns.

Low stocks following a cold end to the winter of 2020/2021 helped start the price spiral before it was elongated by Russia's invasion of Ukraine and the resulting cuts to gas flows.

Data from Nord Stream 1 operators showed that volumes fell early on Tuesday and again on Wednesday.


Economists have warned that recession is inevitable in the event heavy users of Russian gas, including Europe's largest economy Germany, have to take extraordinary measures to ration supplies.

Berlin accused the Russian government of a "power play" through its management of Nord Stream 1.

The gas price situation, ultimately, threatens to exacerbate the cost of living crisis across Europe.

What it means for the UK


The Bank of England predicts that UK inflation will pass 11% in the coming months, but the latest price shifts for gas may force policymakers to ramp up their prediction when they next meet in a week's time.

That is because the cost of natural gas has been the driving force behind increases to energy bills - for households and businesses alike.

The inflation problem is made worse for consumers when firms pass on their own higher energy and fuel bills down the supply chain, making goods and services more expensive across the board.

The energy price cap is predicted by industry experts to hit an average £3,244 per year from October and then pass £3,300 in January at the next review.

The cap currently stands at an average £1,791.

MPs' this week demanded the government raise its £37bn cost of living support package for households in anticipation of the price surge to come.

The big question is whether the shock to bills will be even worse than anticipated.

The answer, for this winter, probably lies with Vladimir Putin at the Kremlin.

Newsletter

Related Articles

0:00
0:00
Close
Northern Ireland Executive Agrees on Multi-Year Public Sector Pay Restructuring Framework at Stormont
Department for Transport Confirms Acceleration of Electric Vehicle Charging Infrastructure Rollout Along Strategic Motorways
Welsh Government Announces Emergency Funding Package to Support Agricultural Sector Facing Severe Weather Impacts
High Court Rules in Favor of Environmental Coalition Over Government Carbon Reduction Plan Deficiencies
Office for National Statistics Reports Stable Retail Sales Growth Supported by Strong Digital Commerce Volumes
Scottish First Minister John Swinney Secures Cross-Party Support for Renewable Energy Export Expansion
National Health Service Digital Reports Major Breakthrough in Reducing Elective Waiting Lists Across England
Chancellor Rachel Reeves Outlines Infrastructure Spending Reforms to Boost Regional Economic Growth Across Northern England
Bank of England Holds Baseline Interest Rate at Five Percent Amid Persistent Core Inflation Pressures
House of Lords Advances Representation of the People Bill to Modernize Electoral Law Ahead of General Election
Financial Markets and Private Equity Assess Tax and Corporate Realignment Following Recent Chancellor Budget Adjustments
Justice Committee Warns Legal Aid Is a Service in Managed Decline Due to Inadequate Government Funding Responses
Royal Navy Intercepts Russian Intelligence Vessel and Warships Across Intensive North Sea Operations
Business and Trade Committee Slams Government Policy on China as Fragmented and Lacking Strategic Direction
Home Secretary Shabana Mahmood Softens Immigration Plans Following Intensive Cabinet Backlash Over Settlement Timelines
Automotive Industry Data Reveals Continued Acceleration in Battery Electric Vehicle Registrations Across British Dealerships
High Court of England and Wales Rules on Landmark Legal Challenge Regarding Local Government Housing Mandates
Department for Energy Security and Net Zero Approves Expanded Offshore Wind Infrastructure Along Scottish Coastline
Competition and Markets Authority Launches Broad Investigation Into Artificial Intelligence Infrastructure and Cloud Partnerships
United Kingdom and European Union Launch High-Level Preparations for Bilateral Defense and Security Summit in Brussels
National Health Service England Unveils Emergency Workforce Reforms to Alleviate Winter Accident and Emergency Pressures
Chancellor Rachel Reeves Finalizes Autumn Budget Adjustments to Meet Fiscal Rules and Fund Public Services
Bank of England Prepares for Interest Rate Decision Amid Rising Bond Yields and Inflationary Pressures
House of Lords Begins Detailed Legislative Scrutiny of Representation of the People Bill and Cyber Security Laws
Metropolitan Police Detain More Than Three Hundred Individuals Following Large-Scale Demonstration Outside London Embassy
Home Office Prepares Stricter Residency Rules Requiring Vulnerable Migrants to Wait Decade for Settlement Rights
Professional Mental Health Bodies Demand Statutory Regulation for Counsellors and Psychotherapists
National Grid Confirms Construction of Britain's Largest Electrical Substation to Power Teesside Data Centre
Prime Minister Keir Starmer Travels to Samoa for Commonwealth Summit Amid Debates on Economic Cooperation and Reparations
Home Office Implements Enhanced Digital Border Controls and Visa Processing Systems at Major Airports
Office for National Statistics Reports Stable Employment Participation Rates Across Regional Labor Markets
Department for Business and Trade Announces Strategic Partnership to Secure Critical Mineral Supply Chains
Scottish Government Unveils Regional Economic Development Strategy to Boost Advanced Manufacturing in Glasgow and Dundee
Treasury Officials Review Taxation Frameworks and Capital Gains Rules Ahead of Autumn Budget Disclosures
National Health Service Leaders Warn of Winter Capacity Pressures Across Acute Care Facilities
Bank of England Prepares for Key Interest Rate Decision Amid Sticky Inflation and Fiscal Policy Pressures
Home Office Expands Border Security Operations and Intelligence Sharing With European Partners
Office for National Statistics Reports Modest Retail Sales Growth Ahead of Crucial Christmas Trading Season
Welsh Government Unveils Strategic Plan to Boost Regional Technology Innovation and Digital Skills Training
Department for Environment Food and Rural Affairs Implements New Agricultural Subsidies Framework for English Farmers
Scottish First Minister John Swinney Announces Major Regional Infrastructure and Green Energy Investment Strategy
National Health Service Leaders Warn of Severe Winter Pressures and Mounting Accident and Emergency Backlogs
Bank of England Monetary Policy Committee Signals Cautious Interest Rate Path Amid Persistent Services Inflation
Chancellor of the Exchequer Rachel Reeves Finalizes Autumn Budget Framework Aiming to Close Public Sector Fiscal Gap
Department for Science, Innovation and Technology Prepares Enhanced Artificial Intelligence Safety and Cyber Defense Frameworks
United Kingdom Government Expands International Sanctions Framework Against Russian Shadow Fleet and Financial Enablers
Institute of Directors Reports Sharp Post-Budget Drop in Business Confidence Despite Long-Term Investment Intention Shifts
Chancellor John Healey Defends Sweeping Fiscal Adjustments and Household Support Packages Following Autumn Budget
Parliamentary Petitions Committee Schedules Major Legislative Debates on Special Educational Needs and Non-Stun Meat Labelling
Regional Devolution and Good Growth Fund Frameworks Reshape Local Government Funding Across English Regions
×