Europe, Gas prices increase by 24% after Gazprom’s supply to Poland and Bulgaria is cut off, SEE Energy News
Reference prices for natural gas in Europe rose on Wednesday after Russia announced it would cut off supplies to Poland and Bulgaria, escalating regional tensions and warning the continent that it is determined to cut supplies.
On the stock exchange in Amsterdam, the prices of gas futures increased by 24%, to 127.5 euros per MWh, which is the highest level since April 1.
Russian President Vladimir Putin called on “enemy” countries to open an account in Gazprombank for payments in euros or dollars for the import of natural gas, and those funds will then be converted into Russian rubles.
Moscow’s decision to cut off gas supplies to Poland and Bulgaria points to the use of energy as a weapon in the context of the spread of the conflict outside Ukraine’s borders.
The decision will increase the demand for gas, as Poland and Bulgaria will have to buy gas to replace Russian supplies, analysts at Jefferies Group LLC believe.
Analysts are now turning to other European capitals, especially Germany and Italy, which are major importers of Russian gas. No reaction has arrived from Berlin yet, while the government in Rome announced that it is monitoring the situation, said the sources, who wished to remain anonymous.
Payments for gas delivered this month – affected by Putin’s request – are due in late April and May, and European leaders are trying to find the best answer.
The suspension of Russian gas supplies to Poland and Bulgaria is expected to have a “modest physical impact” on the balance of the gas market in northwestern Europe, say analysts at Goldman Sachs Group Inc. However, this decision raises the stakes for the EU “if the new gas payment system violates sanctions and will therefore keep market volatility high,” analysts warn.
Warmer weather in Europe in April also reduced the need for an emergency gas supply, although customers are now starting to fill their warehouses for next winter.
EU prepares “coordinated response”
The European Union is preparing to cut off Russian gas supplies and is preparing a “coordinated response”, European Commission President Ursula von der Layen said on Wednesday after Russia’s Gazprom suspended supplies to Bulgaria and Poland.
“Gazprom’s announcement is a new attempt by Russia to blackmail us with gas. We are ready for this scenario. We are developing our coordinated response, “she wrote on Twitter.