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The wholesale price of gas for the European market is increasing significantly, reacting to the interruption of supplies by the Nord Stream 1 gas pipeline from Russia. The price of the key gas futures contract for October delivery rose 30 percent in the morning on the virtual trading hub Title Transfer Facility (TTF) in the Netherlands, after a slight correction, the growth accelerated before midday. Shortly after 10:00 a.m. CET, the price of gas showed a growth of 33 percent above 295 euros (about 7,250 CZK) per megawatt hour (MWh).
Russian gas company Gazprom announced on Friday evening that maintenance work on the only operational turbine of the Nord Stream 1 gas pipeline had revealed faults. The gas pipeline will therefore remain out of service until they are removed. Nord Stream 1 transports gas from Russia to Germany along the bottom of the Baltic Sea and is the main route for Russian gas supplies to the European Union.
According to XTB analyst Jiří Tyleček, the increase in gas prices is not a surprise. “From the available information, it appears that this is a political way of conducting the war in Russia. (Russian President Vladimir) Putin knows that now this step is causing the most damage. On the other hand, it seems that Europe is already prepared for this situation to a large extent. Gas prices may once again increase to records, but electricity prices could start to gradually disconnect from gas,” said Tyleček.
Now, according to Tyleček, it will depend on the further development of the fight against high energy prices at the political level. “There are steps on the table that should help keep gas prices out of extreme levels,” he added.
The situation surrounding Russian gas supplies became more complicated when Russia launched an attack on Ukraine in February and the European Union enacted a series of anti-Russian sanctions in retaliation. Uncertainty over supplies from Russia raises concerns about gas shortages in Europe in the winter months. This pushes up European gas and electricity prices. The European Union is now considering various measures in an attempt to limit the growth of energy costs, which has negative effects on the EU economy and the living standards of the population.
A year ago, the wholesale price of gas in Europe was just under 30 euros, and two years ago it was around 15 euros per MWh. It started to increase already last autumn, according to some analysts, it was a reaction to the energy policy of the European Union, which is pushing for a rapid shift away from fossil fuels without an adequate solution. Another noticeable increase in prices occurred after the invasion of Russian troops into Ukraine in February this year.
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