European TTF natural gas surges 50% after Russian escalation
Quantum Commodity Intelligence - European natural gas prices over 50% Thursday after Russia announced a "special military operation" against Ukraine, targeting the country's military capabilities.
March TTF natural gas prices were trading at €134.316/MWh at the close GMT, up 51% from its previous close of €88.891/MWh, having traded as high as €144.28/MWh earlier in the session.
April TTF was 50% higher at €132.71/MWh, while the May contract was 49% higher at over €130.663/MWh
Prices were already sharply higher this week after German Chancellor Olaf Scholz said certification of the Nord Stream 2 pipeline could not go ahead because of the Russian invasion of Ukraine.
Fears over Russian supplies ramped up after the sharp escalation in military operations, with a further tranche of sanctions expected, which analysts say could lead to retaliatory action from Russia by cutting gas supplies.
"Should the Kremlin decide to cut off gas exports to Europe, all the world's gas producers put together do not have the spare capacity to plug the gap," said Vandana Hari, Founder & CEO, Vanda Insights
The EU relies heavily on Russia for gas supplies, mostly through the Yamal-Europe pipeline, which crosses Belarus and Poland to Germany, and the Nord Stream 1 pipeline, which goes directly to Germany from the Baltic.
In 2019, the last pre-Covid year, the 28 countries of the European Union, which included the UK, was dependent on Russian gas for 44% of its imports and 37% of its consumption, according to research by SEB.
Russia piped 1,913 TWh of natural gas to the continent in 2019 to help meet EU28 demand of 5,212 TWh.
However, Goldman Sachs has reiterated its stance that energy supplies from Russia are unlikely to be impacted.
"The unfolding crisis between Russia and Ukraine raises the risk of disruptions to
commodity flows, but our base case model does not reflect any disruptions. We expect
no disruptions, neither from EU restricting existing gas flows, nor from Russia which
stated they would keep providing existing flows," said Goldman in a report released late Wednesday.
