Oil and now gas. The war in Ukraine is driving up energy prices. Bad news: the trend is up.
Thus, the Dutch TTF, the European gas market benchmark, reached 345 euros per megawatt hour (MWh) on 7 March (compared to 214 euros on 4 March and 76 euros on 22 February).
This increase is mainly due to the invasion of Ukraine: since Russia supplies 45% of European gas imports, the uncertainty caused by the war and possible economic sanctions is causing prices to rise.
At the moment, European Union sanctions against Russia do not apply to energy. But if they are extended to that sector, “Europe could run out of gas next winter,” Katherine McGregor, Engie’s general manager, warned France Inter. “Therefore, it will be necessary to take a number of measures that are already expected by governments and public authorities.”
Freezing gas prices?
In France, the gas price was frozen from October until June 30, 2022. In autumn, it rose sharply due to the recovery of the world economy. After the invasion of Ukraine, Economy Minister Bruno Le Maire said he was in favor of continuing this freeze. “We are ready to extend the price freeze” beyond June, he said on February 25.
Russia is one of the main suppliers of energy resources to Europe. To limit European dependency, the International Energy Agency (IEA) has considered ten measures that need to be implemented quickly. Among them: the replacement of Russian supplies with contracts with Algeria or Azerbaijan and the development of new wind projects. Users are also advised to lower the temperature of the heating thermostat by one degree.
The price of metals produced in Russia also rose. Aluminum broke the $4,000/t threshold for the first time, while copper and palladium hit $10,845/t and $3,442/t, respectively.