Natural gas prices jumped in Europe, while traders assess the risks related to the security of supplies, especially with the approach of winter, after Russia’s escalation of the war in Ukraine, and despite the countries increasing their efforts to prevent the exacerbation of the energy crisis.
Futures contracts jumped during trading today, Wednesday, by 10%, recording gains for the second day in a row, according to “Bloomberg” agency.
Russian President Vladimir Putin announced a partial mobilization of the army as of Wednesday, accusing the West of working to destroy Russian territory and practicing “nuclear blackmail” against his country, noting that Russia has “a lot of weapons to respond.”
In the latest move to ensure supply, Germany said it would nationalize Uniper to avoid the collapse of the energy sector with the onset of winter, while the British government unveiled a multi-billion-pound rescue plan for companies, although winter risks remain.
Eastern gas flows through the Yamal-Europe pipeline to Poland from Germany were halted on Wednesday, data from Gazkid, the pipeline’s operator, showed, while Russian supplies through Ukraine remained stable and the Nord Stream 1 pipeline remained shut down.
Flows through Nord Stream 1 have been halted since August 31 for maintenance operations that were supposed to last only three days, but the pipeline has not yet resumed operations, and Moscow has blamed the supply disruptions on Western sanctions and technical problems.
The seven-month-old crisis and the latest Russian escalation are raising the stakes for disruptions to Russian gas supplies, especially along the long main lines running through Ukraine.
“The Russian president’s comments today will certainly support European gas prices, raise concerns about ensuring gas flows, and if military developments escalate further, that will be even more,” said Tom Marzik Manser, head of gas analytics at ICIS in London. What do merchants do?
The Ukraine crisis, which has kept gas prices seven times above their usual seasonal levels, has already pushed the European economy to the brink of recession, despite the historic steps countries are taking to ensure adequate energy supplies with the start of the official heating season next month.
“The situation this winter is manageable, but it can always get more difficult, so we can’t be really satisfied,” Monica Zigre, chair of the European Commission’s Energy Platform task force, said in a webinar.
Oil prices jumped more than 3% after Russian President Vladimir Putin ordered a partial mobilization of the army to hold occupied territories in Ukraine, in an escalation that could further disrupt energy supplies.
Brent crude rose to $93.24 a barrel (November contract), while West Texas Intermediate crude (November contract) reached $86.60 a barrel, immediately after Putin’s decision, who said that Russia will take the necessary steps to defend its sovereignty and will defend the land by all available means. The Kremlin moved to hold a mock vote to annex the areas it still controls in Ukraine.