Europe gas surges as Germany clashes with Russia over supply

Bloomberg

European natural gas prices jumped following disruptions to a key transit route through Ukraine, and as Germany said Russia was using energy as a weapon in an escalating clash over supply.
The benchmark contract surged more than 22%, with shipments from Russia via Ukraine set to fall by about 30% following interruptions at a cross-border entry point as a result of the war. It adds to the market’s concerns as Moscow halted shipments to Gazprom Germania GmbH and its units in retaliation.
Moscow sanctioned the former Gazprom PJSC subsidiary — which is now under the control of the German energy regulator — including
energy supplier Wingas and London-based unit Gazprom Marketing & Trading Ltd. The move could also upend LNG markets, and bring even greater supply worries.
Still, German Economy Minister Robert Habeck downplayed the impact, saying the Russian cuts amount to just 3% of the country’s imports. The nation was getting shipments from alternate sources and can cope with the disruption, he said. Utility RWE AG said Russia’s new sanctions are “not material.”
The new risks come just as a solution appeared to be emerging for what has been the
main headache for weeks — Moscow’s demand for ruble payments for its gas.
Companies were increasingly confident they could keep buying Russian supplies without breaching sanctions, with Italian Prime Minister Mario Draghi appearing to back such a move. More European buyers are opening ruble accounts.
“The developments are only the latest in a string of a steady deterioration of security of supply amid the war,” Eurasia Group said in a note. “The ongoing disruptions will therefore mean EU states will step up preparations for bigger gas supply disruptions from Russia this year.”
Dutch front-month gas, the European benchmark, was 20% higher at 113.01 euros per megawatt-hour as of 1:54 pm in Amsterdam. The UK equivalent was up 37%.