Gas and oil prices have risen amid fears the Ukraine crisis could have a damaging effect on one of Europe’s main energy supply routes. But analysts say high European gas stocks will limit the turbulence. Gas futures climbed by up to 10% in early trading, while the benchmark price for oil rose by more than 2%. Traders are worried about the stability of supplies from Russia, which provides a quarter of Europe’s natural gas, half of it through Ukraine. However, a relatively mild winter has reduced demand for heating fuel, with storage levels at the main gas hubs about 20% greater than last year. In Germany, Europe’s biggest gas consumer and Russia’s largest customer, stocks are at more than 60% of capacity, capable of satisfying 60 days of demand.
Russia is Europe’s biggest supplier of natural gas, but the continent has been weaning itself off dependence on its neighbor for the last decade.It now imports less than 30% of its natural gas from Russia, compared with 45% in 2003, according to European Union statistics. Europe is also less reliant on the Ukraine link, with improved gas infrastructure now meaning supplies could go via alternative routes in the event of disruption.
Concerns about one of Europe’s key gas supply routes have had a knock-on effect on other commodities, especially oil, as demand for alternative fuels increased. The benchmark oil price, Brent Crude, rose to a peak of $112.10 per barrel in early trading, its highest since 30 December. Its rise is also due to concerns about oil supplies from Russia, one of the world’s largest oil producers, as well as the impact of any disruption in the gas market.
Source: BBC News