Gas: prices explode in Europe due to winter cold and diplomatic tensions – franceinfo

Where will he stop? The price of gas in Europe broke a new record on Tuesday, December 21, on the first day of winter, boosted by seasonal demand and geopolitical tensions between the main supplier, Russia, and its client countries.

The benchmark European price, the Dutch TTF, rose around 1 p.m. by almost 20% to 175 euros per megawatt hour (MWh), breaking its previous record on 6 October, when that of British gas for delivery next month peaked at 435 pence per therm (a unit of heat), up from the previous day’s close. These spot price levels are almost eight times higher than at the start of the year.

The renewed tensions at the border between Russia and Ukraine are regularly put forward by market observers to explain the surge in prices. Westerners claim that Moscow is massing military equipment on the Ukrainian border with a view to a possible operation, accusations rejected by Russia, which says, on the contrary, is under the threat of NATO, which is arming Ukraine and increasing the deployments of air and sea assets in the Black Sea region.

The change of tone in Berlin on the controversial Nord Stream 2 gas pipeline is also at the center of concerns, since it would bypass Ukraine, the transit route currently used for much of the Russian gas purchased by the European Union. The gas pipeline Nord Stream 2 has always been defended by former Chancellor Angela Merkel, but the new German government is less conciliatory. The Minister of the Economy, the ecologist Robert Habeck, warned on Saturday against “severe consequences” for the pipeline in the event of Russian aggression against Ukraine. In this context, each new diplomatic nudge leads to a wave of buying on the gas market.

Gas stocks in Europe were also affected by a prolonged winter in 2020 and have not been sufficiently replenished since. In addition, there is a reduced contribution of renewable energies, such as wind power, for meteorological reasons.