NEWS: UKRAINE IN WAR
Gas prices hit a record high in Europe.

Euro­pean and British gas prices soared on Wednes­day, with a Dutch bench­mark gas price hit­ting a record high as coun­tries said Euro­pean Union sanc­tions against Rus­sia could tar­get gas ship­ments, while some Russ­ian liq­ue­fied gas ship­ments changed course.

The UK ordered on Mon­day that ships asso­ci­at­ed with Rus­sia be blocked at its ports, while offi­cials from some EU coun­tries said the 27-nation bloc was con­sid­er­ing a ban on Russ­ian ships.

Although the Par­lia­ment does not set sanc­tions and its vote on Tues­day was non-bind­ing, traders said it point­ed the way to pos­si­ble tougher mea­sures against Rus­sia, which sup­plies about 40% of the EU bloc’s nat­ur­al gas.

Not all coun­tries buy gas direct­ly from Rus­sia, but if coun­tries like Ger­many, the biggest con­sumer of Russ­ian gas, get less from Rus­sia, they have to replace it with oth­er coun­tries, for exam­ple Nor­way, which has a knock-on effect on the gas avail­able to oth­er countries.

The bench­mark Dutch gas con­tract for the first month at the TTF hub hit an intra­day high of $205 (€185) a tonne on Wednes­day — just beat­ing the pre­vi­ous high of $204 (€184.95), seen last Decem­ber when Rus­si­a’s main Yamal pipeline began send­ing gas east in the oppo­site direction.

The UK front-month con­tract hit 384 pence per ther­mie, its sec­ond-high­est lev­el on record as Russ­ian liq­ue­fied nat­ur­al gas car­goes were divert­ed from UK ports.

“The price move­ment today is not based on fun­da­men­tal changes in Euro­pean gas bal­ance sheets,” said Leon Izbic­ki, Euro­pean nat­ur­al gas ana­lyst at Ener­gy Aspects.

“The main dri­ver of the sharp rise in the FTT is a per­ceived increase in the risk of EU sanc­tions tar­get­ing Russ­ian ener­gy exports,” he said.

Despite the ongo­ing war in Ukraine, phys­i­cal gas deliv­er­ies from Rus­sia to Europe through its var­i­ous pipelines have so far remained large­ly unchanged.

Even gas deliv­er­ies from Rus­sia via pipelines through Ukraine have remained robust. Capac­i­ty nom­i­na­tions for sup­plies to Slo­va­kia from Ukraine via the Velke Kapu­sany bor­der point are expect­ed to reach their high­est lev­el so far in 2022, at 881,917 megawatt hours on Wednesday.

But traders and ana­lysts said that as the war and sanc­tions inten­si­fy, the pos­si­bil­i­ties that this could change are also increas­ing, lead­ing to huge price gains.

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