European gas prices have risen after a major shipping route through Ukraine was disrupted and, as Germany says, Russia is using energy as a weapon in response to the growing supply crisis.
Benchmark contracts rose more than 22% and shipments from Russia through Ukraine fell by almost 30% on Thursday as the war disrupted border entry points. This led to market concerns as Moscow retaliated against Gazprom Germany suspending shipments to GmbH and its subsidiaries.
Moscow on Wednesday night approved the subsidiary of the former Gazprom PJSC – now controlled by Germany’s energy regulator – which includes fuel supplier Wingus GmbH and London-based Gazprom Marketing and Trading Limited. The move could also boost the LNG market, which could have a greater impact. Supply concerns.
However, German Finance Minister Robert Hebeck mitigated the impact, saying Russia’s production cuts were only 3 percent of the country’s imports. He said the country receives goods from other sources and may face interruptions. Utility RWE AG says new Russian sanctions are “okay”.
The new accident comes as a solution to a major problem that has plagued it for weeks – Moscow’s demand for ruble payments for its gas. Companies are increasingly confident that they can buy Russian goods without violating sanctions, as Italian Prime Minister Mario Draghi appeared to return on Wednesday. Most European buyers are opening ruble accounts.
“These developments are only the latest in a series of deteriorating supplies during the war,” the Eurasia Group said in a statement. “Continuous interruptions mean that EU countries are preparing for major disruptions to Russia’s gas supply this year.”
European benchmark Dutch gas prices rose 20% to 113.01 euros per megawatt hour in Amsterdam at 1:54 p.m. The UK equivalent grew by 37%. German power also rose, with contracts up 17% the following month.
For months there has been an atmosphere of anxiety in the market regarding Russian supplies. Grid data showed that traffic through Ukraine could reach a minimum from the end of April. It affects major gas transit routes through Slovakia and Austria. Vienna officials say there are currently no restrictions on delivery.
The supply to Germany (the largest pipeline from Russia to Europe) via the Nord Stream is stable. But, in addition to this, the traffic from Norway will decrease on Thursday.
On Wednesday, the Ukrainian gas grid stopped accepting Russian fuel at one of the two main entry points, saying it could no longer control the relevant infrastructure in the territory occupied by eastern Ukraine. Gazprom’s system is currently working, unable to redirect all supplies to another entry point.
For the second day in a row, Russian gas did not reach Sokhranivka station on the Ukraine border. Before stopping it, Sokhranivka processed one-third of the Russian gas flow through Ukraine and the rest through another entry point, Suza.
“The shortage in Sokhranivka supply is not serious, but it gives an indication of what will happen next,” analysts at the SEB said in a note. “It did not create any crisis, but it is a warning of what is to come. We may see more supply disruptions in the future.”
Market news, analysis
- The RWE says the next gas payment to Russia will be by the end of May
- Commerzbank: CFO to review regulations on gas shutdown
- LNG wrap: Asian buyers are looking for more long-term supplies as spot prices rise
- Less Inventories may raise Asian spot LNG prices: BNEF
– With the help of Todd Gillespie.