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Europe’s Energy Prices Soar To New Records As Russia Plans Gas Cuts

Energy prices in Europe soared on Monday to fresh records after Russia’s Gazprom said on Friday that it would halt all deliveries via Nord Stream to Germany for three days, raising renewed concerns that supply via the pipeline could be further cut or halted altogether after three-day unplanned maintenance at the end of August.   

Europe’s benchmark gas prices at the Dutch TTF hub opened trade on Monday morning in Amsterdam, rallying 10% to $270 (269.50 euro) per megawatt hour, which is equivalent to $450 per barrel oil, Ole Hansen, Head of Commodity Strategy at Saxo Bank, tweeted today. During the course of the day, prices jumped by nearly 20% to another record of $289.20 (289 euro) per MWh in the early afternoon in Amsterdam.

Europe’s gas prices have been setting records in recent days amid uncertainty with the Russian pipeline supply, heatwaves driving electricity demand, and at the same time curtailing output from other fuel sources.

Last week, the European gas benchmark traded at what would be an equivalent of $410 per barrel oil. This record was shattered on Monday as Europe, especially Germany, braces for no supply from Russia at all after the three-day maintenance at Nord Stream ends on September 2.

On Friday, Gazprom said it would stop all gas flows to Europe via the Nord Stream pipeline from August 31 until September 2. The reason for the 3-day suspension of gas flows via the pipeline would be due to maintenance work at the Trent 60 gas compressor station, which would be carried out with Siemens, according to Gazprom.

The latest communication from the Russian gas giant has Europe concerned that supply via Nord Stream – now at just 20% of the pipeline capacity – would be further cut or completely halted.

Germany has to expect that Putin will further cut gas deliveries, Germany’s Economy Minister Robert Habeck told broadcaster ARD on Monday.

As a result of increased concern that Russian deliveries will be reduced from already low levels, European gas and year-ahead power prices hit fresh highs on Monday, exacerbating the energy crisis.   

By Tsvetana Paraskova for Oilprice.com

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