The situation in the Middle East has triggered a rally not only in oil prices but also in gas. After the price of Brent reached $119.5 per barrel overnight, the gas market opened today with an increase in the April futures of nearly 30%.
The price of the natural gas contract at the TTF hub in the Netherlands soared by 29.4% — to €69.5 per 1 MWh, or $842.7 per 1,000 cubic meters. The last time gas traded at this level was more than three years ago — on January 13, 2023.
What about Latvia?
The State Secretary of the Ministry of Climate and Energy, Liga Kurevska, reassures that there are currently 5.4 terawatt-hours of gas in the Inčukalns underground gas storage, while total consumption in Latvia in 2025 is projected to be 8.9 terawatt-hours.
In the remaining heating season — in March and April — consumption in Latvia may average 1.2–1.9 terawatt-hours, which is comparable to the national reserve.
Therefore, the activation of emergency mechanisms is not required at this time, and the state security reserve can cover approximately two months of consumption if necessary, Kurevska explained.
Prepare for rising prices
According to the Bank of Latvia, if the price of gas rises from €30 to €60 per MWh, inflation in Latvia will increase by about 1.5 percentage points.
The impact of rising oil prices may be more moderate, as supply options are more flexible than in the case of liquefied natural gas. The Bank of Latvia estimates that a 10% increase in oil prices in the medium term will raise inflation by about 0.5 percentage points.
Vilerts also noted that additional risks are created by higher insurance and transportation costs, as well as an increase in borrowing costs for governments in the global market.
