Mar 2, 2022 - Energy & Environment

Europe's natural gas problem gets worse

Data: FactSet; Chart: Axios Visuals

European natural gas prices have risen an astounding 60% this week, as investors panic about disruptions to supplies.

Driving the news: Benchmark natural gas prices briefly touched a record high of €194 euros per megawatt-hour on Wednesday.

Why it matters: Europe gets 40% of its natural gas from Russia. Gas is crucial for heating homes, power generation and industrial activity on the continent, and the surge could upend its economy.

  • Last summer, the gas market became the first battlefield of what is rapidly becoming an economic war between Russia and the West.

What they're saying: "Market participants have been contemplating the potential for supply disruptions," wrote natural gas analysts at JPMorgan yesterday. "And undoubtedly the probability of a supply disruption is increasing as we pen this publication."

Yes, but: For now, Russian gas continues to flow west. But military destruction of pipelines in Ukraine, sanctions, or Russian political decisions to cut supplies are all at risk, analysts say.

Go deeper: Putin's (natural) gaslighting of Europe.

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