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The energy crisis in Europe shows few signs of abating. The natural gas markets, at the root of the problem, remain nervous as supplies are tight and traders doubt the continent has enough fuel stored to go through a cold winter without interruption.
The build-up of Russian troops on the border with Ukraine, through which Russian gas flows west, also added to concerns about gas depletion. Already, the low volumes of gas from Russia, the main European source of fuel imports, have helped to increase prices in recent months.
“There is a risk of a supply shortage that could erode economic growth and trigger public discord,” said Henning Gloystein, director of energy and climate at Eurasia Group, a political risk management firm, adding that power outages are possible in the worst case. Mr Gloystein said if the situation worsened, governments could order factories to cut gas consumption to ensure households have enough to keep warm.
On Tuesday, gas at the TTF trading hub in the Netherlands hit record highs of around $ 60 per million British thermal units, according to reports that flow in a pipeline that carries Russian gas to Germany were sent back to the east. (European gas prices have doubled this month and are about 15 times the price of gas sold in the United States.)
Mr Gloystein said the change in leadership may reflect opportunistic business activity rather than sinister maneuvers on Moscow’s part, but the fact remains that natural gas markets in Europe are poised to soar at the slightest provocation.
Tensions between Russia and the West over Ukraine make it very unlikely that the giant Nord Stream 2 gas pipeline will soon open from Russia to Germany and bring relief.
In a call with reporters on Tuesday, Karen Donfried, assistant secretary of state for European and Eurasian affairs, said Washington considered Nord Stream 2 “a Russian geopolitical project that compromises energy security and the national security of one party. important euro “. -Atlantic community.
Ms Donfried said the United States was working closely with the new German government to strengthen Europe’s energy security. Analysts, however, say that while high prices are attracting flows of liquefied natural gas to Europe, shipments may not be sufficient to replace Russian gas or to ease the crisis.
As gas is an essential fuel for power generation, electricity prices are also skyrocketing across Europe. In Britain, for example, stable electricity was trading on Tuesday for about 340 pounds, or about $ 450, per megawatt hour, a wholesale measure, on the Epex Spot exchange. This is about three times the average price of electricity during the year.
The high gas prices of recent months will ultimately lead to higher energy costs for UK and foreign households. Martin Young, an analyst at Investec, a securities firm, predicted in a recent note to clients that UK consumers, who have been protected by price caps, could see their energy bills increase by more than 50% when adjustments will be announced early next year.
In recent days, the closure of three French nuclear power plants to search for faults has further boosted the electricity market.
“It is becoming the new normal for this winter,” said Mark Devine, trader at Sembcorp, an energy company, of the high prices.