Europe is on the brink of a new energy crisis, as rapidly depleting gas reserves and potential supply cuts from Russia threaten to exacerbate an already difficult situation, according to Bloomberg. The outlet analyzed the regional situation in the wake of US sanctions against Gazprombank, Russia’s primary bank for energy-related transactions, in an article on Saturday.
According to Bloomberg, the European market is still recovering from severe energy shocks experienced two years ago, with the Ukraine conflict contributing to a 45% surge in gas prices this year. Although current prices remain below 2022 records, they are reportedly high enough to deepen the cost-of-living crisis for households and increase pressure on manufacturers.
Bloomberg cited Dr. Markus Krebber, the CEO of RWE AG, who highlighted the concerns. “We still have problems with gas supply. If we really want to be independent of Russian gas, we need to have more import capacity,” Krebber said. He cautioned that this winter could see significant challenges as gas storage facilities are depleting rapidly.
Gas storage has been crucial during the coldest months; however, inventories are declining swiftly due to increased demand for heating amid low temperatures and a lack of wind for power generation. Despite plans to eliminate its dependence on Russian energy, the EU remains one of the world’s major importers of Russian fossil fuels.
This week, the US sanctioned Gazprombank, Russia’s primary bank for energy-related transactions and the country’s last major bank connected to the SWIFT interbank messaging system.
Analysts at Energy Aspects told Bloomberg that losing one of the last remaining routes for Russian pipeline gas would significantly increase market pressures and drive global prices higher. Hungary, which has opposed the harsh measures imposed on Russia due to the Ukraine conflict, said that by sanctioning Gazprombank, Washington is deliberately jeopardizing the security of energy supplies to several European nations.
Summer gas prices, which are typically expected to be low enough to replenish storage, are currently higher than those projected for the upcoming winter, Bloomberg said. This indicates that energy costs are likely to remain high for an extended period, and as storage levels decrease this winter, it will become increasingly challenging to replenish the reserves, the outlet added.