European natural gas prices jumped as workers serving a key export project in Australia prepare for a strike if no deal is reached in pay talks on Wednesday, according to Bloomberg.
Benchmark Dutch front-month gas soared as much as 18%, with traders bracing for more turmoil as the labor negotiations drag on.
The industrial action could start as early as September 2 if Woodside Energy Group Ltd., the operator of the plant, doesn’t offer a suitable agreement, unions said over the weekend. That’s in addition to Chevron Corp.’s plants, where workers started voting on potential strikes last week.
The possibility of supply disruptions in Australia, which may impact 10% of global LNG exports, has kept European traders on edge this month. Anxiety has surged even though the continent is well-stocked for winter and it rarely receives fuel from Australia.
Last year’s Russian supply cuts left Europe highly exposed to shifts in the tight global gas market. If the strikes go ahead and curb fuel shipments to Asia, buyers there will be competing with Europe for replacement cargoes.
Earlier this month, initial news reports on the potential strikes boosted intraday prices by as much as 40%, with supply concerns exacerbated by more bullishness among traders.
While there should be more clarity later this week, the price rally might be short-lived for now given Europe’s high gas storage, analysts at ING Groep NV said in a note. A “significant change in European fundamentals” is possible only if a large part of Australian capacity goes offline, and for a prolonged period of time — at least a month or two, they said.
Dutch front-month futures traded 11% higher at €40.30 a megawatt-hour by 8:37 a.m. in Amsterdam. The UK equivalent contract also gained 12%.