Natural gas stocks, like oil stocks, are still sweltering as a result of the conflict in Ukraine, Europe’s over-reliance on Russia for gas, as well as OPEC and its partners’ refusal to provide aid. Natural gas prices in the United States (NG1:COM) fell 3.6 percent on Monday to $4.833/MMBtu, erasing big overnight gains from Friday’s $5.016 closing price, as concerns over Russia’s confrontation with Ukraine gave way to projections for warmer weather in the United States. Energy prices in Europe, in addition to natural gas stocks and futures on the Dutch TTF, rose to $115 per MMBtu prior to falling to $93 per MMBtu.
The setback, however, might be short-lived, since Russia has threatened to cut down gas exports in retaliation for Western sanctions. Russia is responsible for 40% of Europe’s gas supply, Nasdaq reports citing Oilprice.com.
Moscow has vowed to weaponize its energy exports in response to Western sanctions for the first time since the invasion of Ukraine. With U.S. and European authorities considering a restriction on Russian oil and gas shipments, Russia’s deputy prime minister, Alexander Novak, says his government has the “complete authority” to “impose an embargo” on gas supplies by blocking gas deliveries through the Nord Stream 1 pipeline.
If Western nations follow through on threats to reduce energy supplies from Russia, the Deputy Premier has predicted that oil prices might rise to above $300 per barrel, and the major Russia-Germany gas pipeline could be shut down.
“It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market. The surge in prices would be unpredictable. It would be $300 per barrel if not more,” Novak has said.
According to Novak, replacing the volume of oil that Europe receives from Russia would take more than a year, and Russia “knows where we might redirect the quantities too.”
In the meantime, OPEC proceeds to dismiss Europe and the world’s largest security crisis since WWII, stating that it would stick to its already announced strategy of moderate output increases. In April, the OPEC+ coalition of oil companies says it would raise oil output by 400,000 barrels per day, up from the previous month’s rate of 400,000 barrels per day.