Analyst Yushkov attributed the jump in gas prices in Europe to competition with Asia
The jump in gas prices in Europe is due to the situation in Norway and Asia, says Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation and a leading analyst at the National Energy Security Fund (NEF). He named the reasons for the increase in the cost of energy resources in a conversation with Lenta.ru.
On Monday, June 3, the gas price at the TTF hub increased by 12.79 percent, reaching $439 per thousand cubic meters, which was the highest since December 8, 2023.
First, Norway has reduced its production and exports due to technical problems at a number of projects, the analyst said. “The volume of gas consumption is increasing. This global trend also pushes prices up,” he clarified.
Secondly, hot and dry weather set in in Asia quite early, which leads to hydroelectric power plants starting to produce less electricity. In addition, demand is increasing as the air conditioning season has begun.
“This has increased gas prices in Asia, and since the Asian and European markets are becoming more and more connected, then in Europe, in general, they are forced to raise prices, because otherwise all (liquefied natural gas) LNG will go to Asian markets, because they pay more there. Therefore, Europe is also forced to follow Asia in raising its prices. That is, the price there is rising in order to maintain the volumes of LNG transported in tankers, otherwise it will all go to a more premium market, to the Asian market,” the expert said.
That’s why the price is rising in Europe. That is, firstly, this is competition with Asia, and secondly, as I said, these are problems with Norway, which has reduced some of its capacity. But if Norwegian history is rather local and temporary, then competition with Asia is the new normal that Europe will have to live in now
Previously, the International Monetary Fund (IMF) predicted that Europe’s energy prices would constantly rise in price. According to experts, the region’s energy security may weaken even further, and the economy will become increasingly sensitive to problems with the supply of gas and other hydrocarbons.
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