As traders look for supplies, gas markets increase on both sides of the Atlantic.

Tuesday saw a worsening of the global energy crisis as rising natural gas prices in the US and Europe threatened to send some of the biggest economies in the world into recession.

As traders scrambled to secure supplies ahead of the winter, gas markets in Europe jumped by as much as 10% to as high as €251 per megawatt hour, equivalent in energy terms to more than $400 per barrel of oil. From already extremely high levels in June, prices have more than doubled, though they slightly decreased later on Tuesday.

The actions come after Russia cut off supplies as payback for the West supporting Ukraine after Moscow invaded, and traders were worried about competition for seaborne liquefied natural gas cargoes with Asian utilities before the winter heating season. Politicians in Europe have charged Moscow with turning supplies into weapons.

With gas prices more than ten times higher than average, there is a greater chance of a severe recession, and investors are currently less optimistic about the German economy than they have been since the eurozone debt crisis a decade ago.

As winter approaches, it is anticipated that European gas prices will either stay near record highs or rise even further. Berlin is considering the possibility of rationing gas use, and governments from London to Madrid are preparing to subsidize high utility costs.

Additional price increases would raise the cost of sustaining households, including in the UK where there is growing pressure for the next prime minister to consider capping prices even in the event that Russia completely cuts off supplies.

Bill Farren-Price, a director at the energy consulting firm Enverus, claimed that "European gas prices are still scaling new peaks."

"With customers facing a potential complete Russian shut-off before winter even starts, there is little to stop this rally until we see significant demand destruction, probably meaning a deep recession. We’re not there yet."

Due to the shale drilling boom in the US over the past 15 years, US gas markets remain significantly smaller than those in Europe, but rising energy prices have contributed to decades-high inflation, alarming the White House.

Tuesday saw a brief increase in benchmark US gas prices of almost 7%, reaching over $9.30 per million BTUs, levels that were common prior to the shale revolution.

Analysts predicted further price increases in the upcoming months on both continents as demand increased, winter arrived, and nations rushed to replace Russian energy.

The benchmark contract for delivery in September in the UK briefly increased by more than 18% on Tuesday, reaching £4.80 per therm, or almost $58 per million Btu, before slightly easing.

The benchmark gas price in mainland Europe is $75 per million Btu, and record prices have driven up electricity costs to a level that is six times higher than it was a year ago.

The latest industrial victim of the energy crisis is the metals company Nyrstar, owned by the commodities trading firm Trafigura, which announced on Tuesday that it would permanently halt operations at one of Europe's largest zinc smelters.

According to Peter Rosenthal of the consultancy Energy Aspects, data showing a recent slowdown in output from new shale oil and gas wells due to reduced drilling, bottlenecks in the pipeline network, and rising production costs led to the price increase in the US.

It is a fundamental shift, according to Stephen Schork, editor of The Schork Report, a newsletter about the energy market. He added that the more than ten-year period of low cost US natural gas "is now a bygone era."

US gas prices have increased as underground stockpiles have decreased to 12% below average levels, reduced in part by power plants burning more fuel to meet the summer's higher-than-average electricity demand.

Prices have risen despite the temporary shutdown of Texas' Freeport LNG export plant, one of the country's biggest gas consumers, due to an explosion.

Freeport's restart as early as October would increase supplies for Europe, possibly lowering prices across the Atlantic while increasing demand in the US.

By fLEXI tEAM