The energy landscape in South-East Europe (SEE) has undergone significant transformation as of January 2026, characterized by a new trading regime that emphasizes the rapid emergence and propagation of market signals. This shift reflects a complex interplay between gas, electricity, storage, and cross-border flows, suggesting that what appears to be mere price volatility is rooted in deeper structural changes within the market.
Recent analysis indicates that Romania and Hungary have established themselves as pivotal players in setting the regional marginal price ceiling. In January 2026, average electricity prices reached €150.51/MWh in Romania and €150.41/MWh in Hungary. These figures highlight the markets’ sensitivity to factors such as gas pricing, hydroelectric performance, and import capabilities.
A critical observation is the speed at which price signals traverse the region. When gas supply tightens or hydroelectric generation falters, these signals can influence prices in neighboring countries like Croatia, Serbia, and Bulgaria within a mere 24 to 72 hours. Hungary serves as a key transmission point due to its substantial net import share of 34.03%, while Romania’s limited flexible reserves amplify price movements.
In terms of short-term market dynamics, hydroelectric generation has played a crucial role in dampening volatility during January. Serbia’s hydro output surged by 186.06%, while Greece experienced an increase of 155.37%. This allowed both markets to detach from gas-driven price adjustments despite rising demand levels. However, this effect is expected to be temporary; once hydro availability stabilizes, markets may revert to gas dependency, often resulting in overshooting prices.
Moreover, the TTF gas price crossing the €40/MWh threshold has reactivated systemic risks within the SEE power markets. The increase from approximately €28–29/MWh to nearly €41/MWh has reinstated gas marginality across several countries including Hungary, Romania, Italy, and Bulgaria. As a result, power forward curves have steepened, indicating a shift in market expectations.
Storage levels have also emerged as a significant factor influencing market behavior. By mid-January, storage levels dropped to around 49–51%, well below the five-year seasonal average of 67%. This decline did not trigger immediate scarcity pricing but altered forward risk assessments. Below the 55% threshold, markets began factoring in injection feasibility rather than merely winter adequacy.
Liquidity trends reveal another layer of complexity in SEE exchanges. A notable decline in trading volumes—12.45% on SEEPEX and 27.50% on CROPEX—has masked underlying risks rather than alleviating them. As liquidity diminishes, markets become more susceptible to abrupt price spikes during periods of congestion or tightening imports.
The evolving dynamics of liquefied natural gas (LNG) imports further complicate this landscape. With the EU projected to source 57% of its LNG from the U.S. by 2025—potentially rising to 75-80% by 2030—the focus has shifted from physical supply flows to perceptions surrounding those flows. Reports regarding U.S. export challenges have been observed to influence TTF prices more rapidly than confirmed data can validate.
Italy continues to play a crucial role as the structural anchor for gas pricing within SEE markets, boasting a gas generation share of 61.91% and net imports of 2.78 TWh. This positioning allows Italy to maintain premium pricing even during market stress while transmitting gas volatility laterally into neighboring countries such as Croatia and Slovenia.
In contrast, Türkiye’s average price of €57.42/MWh positions it as a structural outlier insulated by regulatory frameworks and fuel mix considerations; however, it does not serve as a convergence signal for regional pricing trends.
In conclusion, the current state of energy trading in South-East Europe necessitates an integrated approach that considers gas, storage levels, LNG dynamics, hydroelectric output, and liquidity as interconnected variables rather than isolated factors. Market participants who closely monitor these elements will be better positioned to anticipate shifts ahead of actual price movements.
