Seasonal factors, not geopolitics: what is driving gas prices this winter

Europe is entering winter with gas prices a third lower than last year, despite geopolitical tensions. Successful diversification and stable LNG supplies have offset Russia’s influence on the market. EU lawmakers recently approved a ban on Russian LNG imports from early 2026 and a gradual phase-out of pipeline resources by September 30, 2027. The Ukrainian benchmark is in sync with European hubs but retains a local premium due to risks.

The European gas market is entering winter without any worries

Europe entered the 2025/2026 heating season not only without sharp price jumps, but also with gas prices a third lower than last year.

Spot prices in November on the most liquid TTF hub averaged $377 per 1,000 cubic meters, with futures for the month ahead at $380 per 1,000 cubic meters. An important signal: the market did not factor in a “fear premium” — the difference was minimal, less than $3. In the first half of December, the picture became even calmer. Spot prices fell to an average of $338 per 1,000 cubic meters, and futures for January 2026 fell to $339 per 1,000 cubic meters. Prices fell by about 10-11% compared to November.

As a result, the European market entered winter with a fixed price without the classic pre-winter premium. This is particularly significant given the general security situation in the region and the geopolitical risks that could theoretically undermine expectations. However, this has not yet translated into a stable premium in quotations.

The Ukrainian indicator is falling, but the premium to the hub remains

While in November, quotes for December fluctuated in the range of UAH 20.4–21.5 thousand per 1,000 cubic meters (excluding VAT), in the first month of winter, futures for January went down, with an average of UAH 19.9 thousand per 1,000 cubic meters. Thus, the difference was approximately 5%.

Despite the decline in prices in Europe, the Ukrainian cost of gas traditionally includes additional local surcharges: logistics, possible technical work on import routes, etc. Now there is also an insurance element in case of new attacks on gas infrastructure, which could change the balance of resources in the country, even if they are available in the EU.

At the same time, experience shows that most industrial consumers plan their consumption in advance, contracting volumes in advance, and the physical availability of gas on the market during the heating season is guaranteed by stable imports. Combined with domestic production and the successful implementation of this year’s accumulation plan, this offsets the pressure on gas prices.

In general, the Ukrainian trend is synchronous with European hubs, but takes into account our realities.

Are there reasons for price jumps?

Spot and futures prices in the EU are now almost the same, so the most rational forecast for January is a continuation of moderate seasonal fluctuations within 10–15%. The physical presence of gas adds to market stability. LNG, which was previously an additional resource, has significantly strengthened its position in recent years and currently accounts for more than 40% of consumption in the region.

The lion’s share of American resources — 70% of total exports — goes to Europe. In November, deliveries reached 10.9 million tons, setting a record for the second month in a row. LNG plants usually operate more efficiently in cool weather, so new highs are likely ahead.

The risks that could temporarily push European prices up remain classic: cold weather in Northern and Central Europe, as well as global competition for LNG during peak weeks. However, because spot and futures prices are very similar, the market does not currently see a shortage.

For Ukrainian industry, the base price for January is already set at an average of UAH 20,000 per 1,000 cubic meters excluding VAT. New potential attacks on gas infrastructure could temporarily increase the local premium.

The final cost for each buyer will be individual and will take into account prepayment or balancing conditions, transportation logistics, currency fluctuations, distribution tariff policy, and possible technical restrictions at interstate import points.