Europe's energy bill is set to surge to a record-high of $1.2 trillion in 2022 due to soaring energy commodity prices, which further rallied after Russia invaded Ukraine, Citigroup said in a new report cited by Bloomberg.
Citi now expects Europe to pay for energy $200 billion more than it expected just last month, and the latest estimate now exceeds the previous all-time high spending on energy from 2008.
To compare, Citi estimates that in 2021, Europe's energy bill was just $300 billion, four times lower than the expected amount the continent will pay for energy this year.
Europe is now "facing a big headwind from its energy bill," Citi's analysts wrote in their report quoted by Bloomberg.
The recent rally in energy prices and the low natural gas inventories in Europe sent energy commodity and power prices surging in recent months. Europe was grappling with high energy bills even before the Russian invasion of Ukraine, which sent oil and gas prices soaring again on Thursday amid fears of disruption of supplies. Oil prices jumped above $100 per barrel for the first time since the summer of 2014, while Europe's benchmark natural gas prices surged by over 60% on Thursday, after the Russian attack on Ukraine.
Europe imports from Russia more than one-third of the natural gas and more than one-quarter of the crude oil it consumes. Russia accounted for 26.9 percent of European Union crude oil imports and 41.1 percent of the natural gas imports in 2019, the last pre-pandemic year, Eurostat data shows. Russia is the single largest supplier of oil, the fuel most used in the EU's final energy consumption.
The latest Western sanctions against Russia in response to the invasion of Ukraine spared the energy sector and bank transactions related to the flow of energy commodities out of Russia.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More