Summer sea ice cover in the Arctic Ocean has undergone a reduction in the last decade exposing the sea surface to unforeseen environmental changes. Melting sea ice increases water stratification and induces nutrient limitation, which is also known to play a crucial role in methane formation in oxygenated surface water. We report on an excess of methane in the marginal ice zone in the western Fram Strait. Our study is based on measurements of oxygen, methane, DMSP, nitrate and phosphate concentrations as well as on phytoplankton composition and light transmission, conducted along the 79°N oceanographic transect from Svalbard to the Northwest Water Polynya region off Greenland. Between the eastern Fram Strait, where Atlantic water enters from the south and the western Fram Strait, where Polar water enters from the north, different nutrient limitations occurred and consequently different bloom conditions were established. Ongoing sea ice melting enhances the environmental differences and initiates regenerated production in the western Fram Strait. In a unique biogeochemical feedback process, methane production occurs despite an oxygen excess. We postulate that DMSP (dimethylsulfoniopropionate) released from sea ice may serve as a precursor for methane formation. Thus, feedback effects on cycling pathways of methane are likely and could constitute an additional component in biogeochemical cycling in a seasonal ice-free Arctic Ocean. The metabolic activity (respiration) of unicellular organisms explains the presence of anaerobic conditions in the cellular environment. Therefore we present a theoretical model which explains the maintenance of anaerobic conditions for methane formation inside bacterial cells, despite enhanced oxygen concentrations in the environment.