"Europe is in the throes of an unprecedented energy crunch. Some call it a crisis, which, if not addressed, may be comparable to the Arab oil embargo of the 1970s – with dire economic, social and political consequences. Brent crude is at a 5 year high of $84 per barrel while spot natural gas prices are up more than 500% year-over-year, forcing highly polluting gas-to-coal switching and putting the brakes on the EU’s green energy transition. Resurgent energy demand post-Covid, extreme weather events (unprecedented heatwaves and prolonged winters), supply chain disruptions, and poor regional and global stockpiling have all contributed to Europe’s current crisis. Russia’s supremo Vladimir Putin may have a reason to pop a champagne bottle in view of the EU’s sanctions on the Kremlin. He says that Europe had created a self-inflicted wound. He may be right.

 

Per Samer Moses, Manager of Global LNG Analytics at S&P Global Platts:

'Europe finds itself between a rock and a hard place. With global liquified natural gas (LNG) markets tight for nearly a year, and Russia facing its own upstream and infrastructure issues, Europe's two key sources of flexible gas supply have not shown up. Given just how depleted the region's storage situation is, any tremble of bullish news, be it weather or supply outage, has the power to send markets in search of ever higher price anchors, with fundamentals dictating the market will need to balance on demand destruction, a dynamic already being seen in industry across both Asia and Europe.'"