Natural gas and coal prices on global markets reached record levels six months into the Russia-Ukraine war.
Natural gas prices in Europe increased by about 127.6% in the six months since the start of the Russia-Ukraine war.
The price of natural gas per megawatt-hour for March contracts in Europe, trading on the Netherlands-based virtual natural gas trading point (TTF), reached €128.31 ($128.36) on Feb. 24, at the start of the war.
However, the price for September futures contracts, which opened at €272 ($272.12) per megawatt-hour on Wednesday, ended the day at €292.15 ($292.32) per megawatt-hour.
The EU’s post-war sanctions, the reduction in fossil fuels imported from Russia and reduced gas flow to Europe ramped up prices.
The EU aims to reduce natural gas imports by two-thirds by the end of the year to wean off Russian gas dependence.
Russian energy company Gazprom announced on June 14 that gas shipments to Europe via the Nord Stream natural gas pipeline would drop from 167 million cubic meters to 100 million cubic meters.
As of June 16, the company announced that only up to 67 million cubic meters of natural gas would be supplied daily through the line.
In its release on July 27, Gazprom said it would reduce the daily natural gas delivery capacity to Europe via the Nord Stream pipeline to 20%.
As recent as Aug. 19, Gazprom confirmed that natural gas deliveries through the said line would be under maintenance and not operate between Aug. 31 and Sept. 2.
Coal price increases 96% in 6 months
The price of March contract coal traded on the API2 Rotterdam Coal Futures Market was $192.35 on Feb. 24 but rose to $376.95 on Wednesday, showing an increase of 96% over six months.
The price of coal hit its highest closing price since the war at $398.45 on March 2.
Imports of coal from Russia were completely halted under sanctions that came into effect on Aug. 10.
Before the war, Russia’s share of the EU’s coal imports amounted to around 45%.
Supply concerns on global markets pushed coal prices higher after Russia, one of the world’s largest coal-producing countries, entered the war.
Oil price fluctuations continue
International benchmark Brent crude closed the day on Aug. 24 at $101.75 a barrel for a 2.7% increase from Feb. 24, the first day of the Russia-Ukraine war when it traded at $99.08 a barrel. American benchmark West Texas Intermediate (WTI) also increased 1.7% during the same period.
Earlier last month, EU leaders agreed on the sixth sanctions package that calls for a 90% reduction in Russian oil imports by the end of 2022.
The plan also includes phasing out Russian crude oil supplies by Dec. 5 and the supply of refined products by Feb. 5.
EU states agreed to ban seaborne oil transport, partially exempting pipeline oil as some member countries, including Hungary, particularly opposed the oil import ban via the Druzhba pipeline. This pipeline transports Russian oil to refineries in Poland, Germany, Hungary, Slovakia and the Czech Republic.
Recent data shows the EU has so far failed to crash the Russian economy using oil embargoes despite the EU importing 25% of its oil from Russia.
The EU imports 2.2 million barrels per day (bpd) of crude oil and 1.2 million bpd of petroleum products from Russia, accounting for 30% of the bloc’s total of 11 million bpd of oil and oil products imports.
Growing worries over tight supply after the US and European countries imposed an embargo on Russian fossil fuels, uncertainties surrounding Russian oil production and the limited output rise of the OPEC+ group have caused an increase in oil prices of $45 per barrel on average over the past six months.
Brent hit its highest level since July 2008 on March 3, reaching $139.13 before declining to $91.50 on Aug. 17. WTI crude oil traded at $130.50 on March 7 and dropped to $85.75 on Aug. 16.
However, price hikes were capped after the US and its Western partners pledged to release a combined 240 million barrels of crude from their strategic petroleum reserves between April and October.
While inflation pressures exacerbated by high energy costs adversely affected the demand outlook, China’s strict COVID measures caused a significant decline in oil demand of the second-largest oil consumer worldwide.
Source: Anadolu Agency