Natural gas prices skyrocket amid war in Ukraine, European industry under threat

By Dénes Albert
2 Min Read

On the Amsterdam Power Exchange (APX), Europe’s normative market natural gas futures quotes rose 41 percent to €125 per megawatt hour on Thursday, the fourth consecutive daily rise.

Prices were already on the rise all week as tensions over Ukraine escalated, but after Russia launched rocket attacks at dawn on Thursday, the Ukrainian Interior Ministry warned that the capital, Kiev, was the target and called on the population to go to shelters.

The crisis is further jeopardizing Europe’s fuel supply, which is already in an energy crisis as more than a third of the continent’s gas supply is dependent on Russia, and low stocks have already pushed up prices to record levels last year.

Ukrainian gas grid operator GTSOU indicated that gas is still transiting through the country but the gas grid was now operated in “increased security mode.” In the event of an attack or sabotage against the pipeline, prices could rise even further.

Russia is working to keep its gas supplies abroad “uninterrupted,” Energy Minister Nikolai Sulginov said earlier this week. Germany has already suspended the licensing of the Nord Stream 2 gas pipeline, which would supply gas directly from Russia to Europe.

The United States on Wednesday listed the project as being under additional sanctions against Russia. Analysts at Goldman Sachs, analysts at Wood Mackenzie and Rystad Energy AS are also predicting higher prices for the rest of the year as there is a shortage of fuel used in power generation, industry and heating.

Before Russia’s invasion of Ukraine, JP Morgan analysts already warned that dispurtions to oil exports from Russia could drive oil prices to $120 per barrel.

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