Europe | Energy peace remains out of reach

Summary

Europe has managed to secure its gas supply one winter after another following Russia’s invasion of Ukraine, and the market has taken note. But that doesn’t mean things are back to normal.

Key points

• Key points:
• Benchmark natural gas prices in Europe have fallen to 30 €/MWh, still well above pre-war prices.
• Without cheap Russian gas, Europe is reliant on LNG, a global market that is highly sensitive to shocks, from a US strained by AI-driven electricity demand to the prospect of a harsher winter.
• On the positive side, the market is hoping for a possible diplomatic breakthrough between Russia and Ukraine and an easing of sanctions that would in turn push down international prices.
• Moreover, Europe is moving into the winter period with industrial demand weakened by a loss of activity.

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