Approaching Europe’s endgame in gas markets: The MUFG Global Markets Podcast

Over the last week, European natural gas prices have rallied more than 60% to around EUR135/MWh as Russia reduced flows via its main major Nord Stream 1 pipeline, citing issues with turbines undergoing maintenance in Canada with sanctions making it difficult to return it. The cuts which have resulted in reduced gas deliveries to Germany, the Netherlands and Italy comes at a time when Europe is in injection season and pressing hard to hit its target of having storage 80% full by 1 November (currently 55% filled), ahead of the heating season. On net, these cuts are pushing Europe’s gas crisis toward its endgame.

In this week’s podcast, Ehsan Khoman, Head of Emerging Markets Research (EMEA), contextualises the concerning state of affairs and believes that if these reduced flows persist through the summer, then Europe may find it a challenge to adequately supply itself with gas throughout winter, requiring persistent gas prices north of EUR200/MWh to balance the market.

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