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European Gas Prices Surge Following Russian Sanctions

Russia announced sanctions on 31 European energy companies on Wednesday—a move that has pushed gas prices higher in Europe, according to The Wall Street Journal (subscription).

The impact: The companies sanctioned included Gazprom Germania and EuRoPol Gaz, owner of the Polish stretch of the Yamal–Europe pipeline that transfers Russian gas to Germany.

  • “The Russian move cuts gas deliveries to Germany by 10 million cubic meters a day, or around 3% of annual Russian gas deliveries to the country, [German Economy Minister Robert] Habeck said.”

The price jumps: “Dutch gas futures, the benchmark in northwestern Europe, jumped 18% Thursday, while gas prices in the U.K. gained 34% and German power prices leapt 15%.”

  • “Though gas prices are below their March highs, they remain more than four times as high as a year ago, adding to inflationary pressures that are pushing central banks to tighten monetary policy.”

What they’re saying: Habeck said, “The situation is escalating, insofar that the use of energy as a weapon is being realized.” He further encouraged Germans to reduce gas consumption and said that the gas lost from Russia’s sanctions can be sourced from other suppliers.

Expert take: Tom Marzec-Manser, a gas analyst at ICIS, said the Russian sanctions at this point are largely symbolic and ultimately won’t have a major effect on gas supplies.

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