Wednesday 25 Dec
Natural gas prices in Europe have surged for the third consecutive day, fueled by anxieties surrounding the impending expiration of the crucial Russian-Ukrainian gas transit agreement on December 31st. Prices spiked by as much as 1.6% on Monday, following a significant 7% jump last week, amid growing concerns that gas flows through Ukraine will cease.
Russian gas remains the most cost-effective option for several Central European countries. However, Ukraine announced last week that it would reject any alternatives that would allow Russian gas to continue flowing through its territory. While Hungarian Prime Minister Viktor Orban is actively seeking a solution to maintain gas flow through Ukraine, Ukrainian President Volodymyr Zelenskyy has emphasized that transit will only resume with ironclad guarantees against Russian financial gains.
The termination of the current transit contract will force Slovakia and other reliant nations, including the Czech Republic, Austria, and Italy, to shift towards more expensive alternatives like liquefied natural gas (LNG). Although the current volume of gas transported through Ukraine constitutes a relatively small portion of Europe's overall gas needs, a sudden halt could trigger significant price increases in the coming month.
