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- Israel told Chevron to shut down a major natural gas field, and it's threatening to further spike prices of the fuel.
- The world's natural gas market has already been rocked by the war in Ukraine and threats of a strike in Australia.
- Some Israeli gas from Tamar is exported to Egypt, which processes the fuel into LNG that's exported to the EU.
Brace for bad news ahead of winter: Natural gas prices could spike as energy giant Chevron halted operations at a major Israeli gas field following orders from authorities.
"In the wake of the situation, Israel's defense establishment ordered the temporary suspension of natural gas supplies from the Tamar field," Israel's energy ministry said Monday. The Tamar offshore gas platform — off Israel's southern coast — is within range of rocket fire from the Israel-Hamas war.
The shutdown could be a dire development in the energy markets. Energy markets have already been rocked by the war in Ukraine and threats of a strike in Australia, another major gas producer.
While Israel isn't a top natural gas producer, the country's output has grown after production started at several fields, including Tamar. Chevron owns a 25% stake in Tamar, while Houston-based Isramco holds 28.75%.
Some Israeli gas from Tamar is exported to Egypt, a key player in the European Union's energy security. That's because Egypt processes the fuel into liquefied natural gas — which is then exported to EU countries that are weaning themselves off Russian energy amid the war in Ukraine.
It's not immediately clear how much LNG Eygpt has been shipping to Europe, but investors have already been spooked by Tamar's shutdown, as evidenced by the surge in prices of natural gas futures.
After news of Tamar's shutdown circulated, the benchmark Dutch gas futures surged nearly 30% this week to 49.455 a megawatt-hour on Tuesday, their highest level since August. As natural gas is primarily used for electricity generation and heating, higher prices of the fuel could lead to higher power bills.
Chevron told Insider it will continue to supply its customers in Israel and the region from the Leviathan gas field, another major facility, in the Mediterranean Sea.
However, the suspension of Tamar's operations has already cut Israeli gas shipments to Egypt by 20%, Bloomberg reported on Tuesday, citing Egyptian officials.
"If we take out Israeli pipe gas imports from that equation, it will harm the ability of Egypt to export LNG over the coming months," Gergely Molnar, an International Energy Agency analyst, said on Tuesday, per S&P Global.
Dutch TTF natural gas futures closed 12.5% higher at 49.455 a megawatt-hour on Tuesday. They are down 41% so far this year.