In the week ending March 22, 2023, power and gas markets across Southeast Europe (SEE) demonstrated notable upward movement, driven by escalating geopolitical risks that have impacted fuel costs and reshaped regional energy flows. Electricity prices surged in most hubs, while gas benchmarks saw extended gains due to supply concerns linked to heightened tensions in the Middle East.
Day-ahead electricity prices exhibited broad increases week-on-week, with Greece leading the charge at +12.03%, followed closely by Croatia at +9.54% and Hungary at +8.12%. These rises were largely attributed to higher gas input costs influencing marginal pricing. Romania, Serbia, and Bulgaria also recorded more modest gains, indicating a synchronized tightening across the region. Italy’s market remained elevated at €149.04/MWh, reflecting a rise of just over 1%.
Contrasting this trend, Türkiye experienced a dramatic decoupling from its regional counterparts, with prices plummeting by -45.71% to €23.57/MWh, a shift attributed to weaker demand coupled with increased renewable energy output.
Overall, most SEE markets cleared above €100/MWh, with Hungary reaching €121.93/MWh and Greece hovering around the €100/MWh threshold. Serbia maintained its position as one of the lowest-priced markets at €97.43/MWh, benefiting from a relative discount within the regional context.
The divergence between Eastern and Western European markets continued to widen during this period. Central and Eastern European markets saw price increases bolstered by rising fuel costs and tighter system balances, while Western markets such as Spain, Portugal, and France faced declines due to robust renewable generation countering thermal price influences.
Total electricity demand across the SEE region fell by -4.19% week-on-week, primarily driven by a substantial -13.37% drop in Türkiye’s consumption. Conversely, several Balkan markets reported demand growth: Greece at +7.19%, Bulgaria at +5.20%, Romania at +5.01%, and Serbia at +5.05%. This increase was largely due to colder weather conditions fostering resilient consumption patterns.
The generation mix within these markets shifted significantly during the week; wind output surged by +60.1%, while solar generation declined by -14.5%. This change altered intraday price dynamics and contributed to increased market volatility. Thermal generation also fell by -13.65%, with gas-fired output decreasing by -19.05%, as higher fuel costs and stronger renewable penetration limited dispatch capabilities.
Cross-border flows indicated tightening regional balances and active arbitrage opportunities. Italy emerged as the leading import market with net imports of 1,205 GWh, while Hungary increased its imports by +36.3%. Greece expanded its export position to -261 GWh, and Serbia reduced imports by -35.3%, reflecting improved domestic balance conditions.
The gas market also experienced significant upward movement during this period, with TTF front-month futures climbing from €50.9/MWh at the week’s start to a peak of €61.9/MWh, before settling around €59/MWh. This resulted in a weekly average of €55.6/MWh, marking an increase of +9.2%.
This rally was largely fueled by intensifying geopolitical risks following attacks on energy infrastructure in the Middle East, particularly affecting LNG capacity in Qatar and disruptions related to the Strait of Hormuz—a crucial global transit route for energy supplies. The potential loss of approximately ~20% of global LNG supply flows has introduced a significant risk premium into European gas markets.
The situation is further complicated by European storage levels remaining below an average of 30%, with some countries dipping under 25%. This raises concerns ahead of the upcoming injection season as market participants prepare for potential supply challenges.
Demand-side adjustments have been observed despite tightening supply conditions; European gas consumption has been approximately 14% below seasonal norms since early March, equivalent to a reduction of around 2.5 bcm. This reduction has partially offset the impacts of supply shocks.
LNG inflows into Southern Europe saw an uptick, with Greece reporting inflows of 962.64 GWh (+15.4%), while Italy recorded inflows of 4,288.14 GWh (+22.4%). However, Croatia experienced a decline in LNG inflows by -9.2%.
The global price landscape remains varied; US Henry Hub trades at approximately $2.97/MMBtu (~€11.28/MWh), significantly lower than European levels, while Asian JKM benchmarks are around $19.99/MMBtu. This disparity highlights continued competition for LNG cargoes among regions.
The rise in gas prices continues to influence wholesale electricity pricing across most SEE hubs; however, there are indications of short-term decoupling due to strong renewable output and fluctuating demand patterns.
The evolving pricing environment reflects an increasingly complex interplay where gas remains a primary structural driver for power prices, yet short-term fluctuations are increasingly dictated by renewable generation dynamics, cross-border flows, and weather-related demand changes.
The outlook for both gas and electricity markets remains uncertain amid unresolved geopolitical risks and low storage levels, suggesting continued volatility in the near term as future developments in LNG supply and regional demand responses unfold.
