Europe Still Counting on Russian Supplies for its Gas Market

Europe's natural gas supply seems to be much less secure than it was a few weeks ago. Moscow announced last month that it would stop supplies to Poland and Bulgaria, and stakes again this week after Ukrainian gas carriers announced that they would stop transporting Russian gas through an important part of the country's network. 

Liquefied natural gas (LNG) is a major source of fuel fluctuations in Europe, and prices at European Dutch hubs have been volatile. Thursday's benchmark rose 13% as traders struggled to measure the potential impact of new Russian sanctions before falling a little earlier on Friday. 

Despite volatility, the market may not be completely burned up even with modest supply turmoil. The European LNG benchmark peaked at €227 per megawatt-hour shortly after Russia's invasion of Ukraine, equivalent to about $236.

Politics can also cause supply turmoil. The first sanctions were far from the flow of energy in Europe, but not anymore. The United States of America has banned Russia's oil purchases, and the European Union has finalized a similar embargo.