Your average Irish household might disagree but the consensus is that Europe got off relatively lightly last winter when it came to the impact of Russia’s war in Ukraine on natural gas supplies.
By diversifying and committing to a 15 per cent cut in demand across the bloc, the storm was largely weathered, assisted also by a relatively mild winter that helped keep supply on a more even keel than expected albeit at a significant cost to consumers.
Next winter, however, could prove to be every bit as challenging on the price side of the equation.
Call it a coup attempt or a rebellion or whatever you like, it was always going to be interesting to see how markets would move on Monday after Yevgeny Prigozhin’s march on Moscow at the weekend.
Bloomberg reported that benchmark Dutch gas futures were 1.6 per cent lower on Monday evening. But that was after advancing as much as 14 per cent earlier in the day and as much as 20 per cent in the month of June alone.
Price fluctuations have increased in recent weeks as winter comes into view due to a number of factors, not least the temporary closure of a number of Norwegian gas facilities for maintenance.
The truth is that as long as the war continues on a deeply uncertain trajectory, convulsions of this variety are going to be a feature. This was evident on Monday when traders, having taken short positions on the price of gas expecting it to continue to fall, rushed to buy futures to cover themselves as supply concerns took root again.
“The market may also have to deal with heavy gyrations for a few more years,” wrote the Bloomberg team on Monday.
“Some of the world’s largest gas producers have warned that Europe will remain prone to volatility until a new wave of supply, due around 2026, eases the tightness left by Russia’s cuts.”
Even with those cuts, Russia still exports liquefied natural gas to Europe and the increasingly parlous situation in the country remains a significant concern.
The war in Ukraine remains a graveyard of predictions and on the demand side, luck might again be on Europe’s side this winter. But for consumers, the era of sky-high household bills could be far from over.
