Israel attacks Iran's oil and nuclear facilities to ease concerns, European gas follows a fall in oil prices

The Zhitong Finance App learned that European gas prices plummeted on Tuesday. Earlier reports said that Israel was willing to avoid attacking nuclear facilities and oil targets when retaliating against Iran's recent attacks.

According to the data, the European gas benchmark futures price once plummeted 4.2%, the biggest drop in nearly a month. Previously, Brent crude oil (which is linked to some gas contracts) fell by more than 4% as concerns about potential supply disruptions eased.

According to related reports, Israeli Prime Minister Binyamin Netanyahu told US President Joe Biden's administration that he is willing to attack Iran's military facilities rather than oil or nuclear facilities. Israel later said it was listening to US concerns about its plans to fight back against Iran, but would act on its own assessment.

Natural gas is an important fuel for winter heating in Europe. If the Middle East conflict escalates, energy-scarce countries such as Egypt may be affected, thus increasing global competition for natural gas. A key risk would be the closure of the Strait of Hormuz, which transports about one-fifth of the world's liquefied natural gas.

Global gas supply will remain limited for at least two years after construction of key new plants is delayed. Furthermore, unless an alternative supply agreement is reached, Europe will lose a large amount of surplus pipeline gas supply from Russia once the transit agreement with Ukraine expires at the end of the year.