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Russia Fires a Big Warning Shot, Gas Sanctions On the EU

Natural-gas prices jump 14% in Europe after Russia sanctions some energy companies.
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Natural Gas Prices Soar in Europe

Please consider Natural-Gas Prices Soar in Europe After Russia Sanctions Energy Companies.

Natural-gas prices in Europe shot higher Thursday, a day after Russia unveiled a set of sanctions on energy companies operating on the Continent that could further threaten supply.

One target of the Russian sanctions was Gazprom Germania GmbH, a major Gazprom unit that the German government took control of last month. 

Dutch gas futures, the benchmark in northwestern Europe, jumped 18% Thursday, while gas prices in the U.K. gained 34% and German power prices leapt 15%. Though gas prices are below their March highs, they remain more than four times as high as a year ago, adding to inflationary pressures that are pushing central banks to tighten monetary policy.

Late Wednesday, Moscow unveiled sanctions on 31 energy companies, including Gazprom Germania and EuRoPol GAZ, owner of the Polish stretch of the Yamal-Europe pipeline that carries Russian gas to Germany. Other targets included Astora GmbH, a gas-storage operator, and Wingas GmbH, a trading company. Both are subsidiaries of Gazprom Germania. Tom Marzec-Manser, a gas analyst at ICIS, said the sanctions on Germania and its subsidiaries appeared largely to be symbolic, having little practical effect on gas supplies. He said, however, that sanctions on EuRoPol could stop Berlin from importing Russian gas via the Yamal-Europe pipeline.

Good Morning From Germany

Germany Puts On Brave Front

Bloomberg reports European Gas Surges as Germany Clashes With Russia Over Supply

The benchmark contract surged 14% as flows from Russia via Ukraine fell further Thursday following interruptions at a cross-border entry point as a result of the war. It adds to the market’s concerns, as Moscow retaliates to Europe’s penalties with a slew of its own curbs targeting some gas companies in the region.

German Economy Minister Robert Habeck downplayed the immediate impact of Moscow’s move, saying the 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.”

Not Material?

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Curiously, I discussed this exact setup on May 10, just two days before Russia's sanctions. 

Please consider How Might a Cornered Putin Respond?

Q: Why is it the US is far more interested in sending weapons and sanctioning Russia than the EU?

A: It's the gas stupid.

How long before Russia has had enough of this game?

Surely Russia can see the EU doing everything it can to reduce dependence on Russian energy.

What if Putin Cuts the Gas?

Is this a very material threat or not? Has anyone thought anything through?

This post originated at MishTalk.Com.

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