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- Out of the blue, but in gas: fuel prices in the EU may rise to $1,500 by the end of the year
Out of the blue, but in gas: fuel prices in the EU may rise to $1,500 by the end of the year
Gas prices in Europe may soar to $1.2–1.5 thousand per 1,000 cubic meters. m by the end of the year due to the EU's complete abandonment of Russian LNG since January, experts interviewed by Izvestia believe. Currently, quotations for blue fuel have already reached their maximum values since December 2022 — $ 1.1 thousand per 1 thousand cubic meters. In addition to reducing supplies from Russia, the situation is affected by the shortage of gas on the world market caused by the closure of the Strait of Hormuz. How price increases will affect the heating season in the EU against the background of minimal gas reserves in storage facilities — in the Izvestia article.
What gas prices are expected by the end of the year
Expectations of Europe's complete abandonment of Russian LNG supplies from January 2027 are already included in prices, experts interviewed by Izvestia believe. According to Dmitry Scriabin, portfolio manager at Alfa Capital Management Company, the loss of another supply source amid an already intense shortage in the global market due to the Middle East conflict creates an additional risk of price increases.
As of October 26, gas futures at the TTF hub, the main virtual trading hub for natural gas located in the Netherlands, were trading at $1,113 thousand per 1,000 cubic meters. For the first time since December 2022, quotations exceeded the mark of $1.1 thousand per 1,000 cubic meters.
By the end of the year, under a pessimistic scenario, gas prices may rise to €100-135 per MWh, which is equivalent to about $1.2–1.59 thousand per 1,000 cubic meters, said Olga Borisova, associate professor at the Department of Corporate Finance and Corporate Governance at the Financial University under the Government of the Russian Federation.
A complete ban on the import of Russian liquefied natural gas (LNG) to the European Union comes into force on January 1, and in the fall of 2027, European countries must abandon the import of pipeline gas from the Russian Federation. Deputy Prime Minister Alexander Novak said earlier in an interview with Vesti that in the first nine months of 2026, the European Union imported 12 million tons of LNG from Russia.
According to Olga Borisova, the price increase is influenced not only by the abandonment of Russian fuel, but also by the low level of gas reserves in European storage facilities, the unstable situation in the Middle East and the approach of cold weather. Kirill Bakhtin, head of the BCS World Investments Russian Stock Analysis center, also expects gas prices to rise by the end of the year, but believes that prices will not exceed $1,400 per 1,000 cubic meters.
An additional factor remains the situation with supplies through the Strait of Hormuz. According to a study by the analytical company "Euler" (Izvestia has it), in mid-October, not a single LNG tanker passed through the strait. LNG shipments at terminals in Qatar and the UAE also dropped to a minimum.
Prices will also be affected by the weather. If it becomes clear in December and January that Europe will be able to pass the heating season without problems, the cost of gas may begin to decrease, Kirill Bakhtin noted.
How prices will affect the heating season in the EU
According to the results of October 24, gas reserves in underground storage facilities (UGS) in Europe amounted to 74.62%, according to data from Gas Infrastructure Europe (GIE). Filling volumes have been at their lowest levels since 2011 for several months now.
On October 20, gas extraction from storage facilities in the EU exceeded pumping for the first time this autumn-winter season. The beginning of the heating season forces energy companies to spend more gas on supplying consumers than they have time to pump into storage facilities to prepare for winter.
The total capacity of the EU storage system is 110 billion cubic meters of activated gas. The level of its reserves in Europe is considered an indicator for the global market, as European countries are its largest importers.
Previously, the required level of filling of UGS in the EU countries by the beginning of the heating season was 90%, but due to fears of disruptions in fuel supplies, the European Union decided to reduce the requirements to 80%.
High prices will encourage more active fuel injection into storage facilities — companies will hurry to use the remaining time before the start of frosts, but the high cost of gas increases the cost of the process itself, Dmitry Scriabin noted. However, even accelerated download rates are unlikely to help completely close the required volumes, the expert added.
Europe has the financial resources to continue purchases at current and higher prices, Kirill Bakhtin believes. However, the European consumer will pay for these consequences out of his own pocket, Olga Borisova reminded.
She also believes that if prices rise too much, Brussels may reconsider its decision to restrict imports of Russian energy resources.
At the same time, as previously noted by presidential spokesman Dmitry Peskov, Moscow is ready to discuss gas supplies to Europe if European countries have an interest in this, and the Russian Federation has free volumes. However, such surpluses are not always available.
Moscow has repeatedly stated that the West has made a serious mistake by rejecting Russian energy resources: it will have to buy them through intermediaries, but at a higher price, which is why dependence on supplies is only growing.
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