“It’s a grim market right now,” Perkins, CEO and chief market trader at Skylar Capital Management, told CNBC. “We are in a state of panic with hot-box buttons,” Perkins added. “If Russia shuts off gas and oil, Europe will try to keep warm this winter and just keep its economies afloat,” he said. Russia’s Gazprom told Polish and Bulgarian state-owned gas companies PGNiG and Bulgargaz on Tuesday that it would suspend gas supplies after the two countries refused to pay President Vladimir Putin’s demands for Russian ruble supplies. The escalation led to the Dutch wholesale gas contract for the next day, a benchmark for Europe, over 20% on Wednesday. Dutch TTF futures contracts have increased by almost 60% year-on-year. “Expect higher prices and high volatility for years to come,” Perkins warned, describing his market outlook as “slightly down front” but “constructive and upward in the long run.” “Given where prices are right now and LNG flows [liquefied natural gas] “In northwestern Europe, it is in fact a declining situation that prohibits the complete elimination of Russian gas,” he said. “In the winter, all bets are off,” Perkins said. “Without Russian gas, which is about 40% of their gas supply or gas demand, it is really difficult to see how the market balances without running out of gas.” Workers pass under pipes leading to oil storage tanks at the central oil and gas refinery in the Salym Petroleum Development field near the Bazhenov shale formation in Salym, Russia. Andrei Rudakov Bloomberg | Getty Images Last year, the European Union imported 155 billion cubic meters of gas from Russia, accounting for about 45% of EU gas imports and close to 40% of its total gas consumption, according to a recent report by the International Energy Agency. European policymakers have rejected Putin’s request, saying it violates existing agreements already agreed in dollars or euros. Europe is still considering a complete ban on Russian imports, despite its widespread dependence on Russia for energy. European energy ministers are expected to discuss the next steps at a meeting in France on Monday next week, according to a recent Reuters report. The United States and the United Kingdom have banned Russian energy imports, but European countries that are highly dependent on Russian supplies, such as Germany, have been reluctant to do so. Germany has said it could wean itself off Russian oil by the end of the year. “This is a clear escalation of risks in the gas markets,” MUFG analysts said in a research note on Thursday, describing the Russian ban as “a major turning point for European gas markets.” “We believe that it is in the interest of both the EU and Russia to find a solution that complies with the EU’s legal requirements for gas payments … given the unprecedented burden of disrupting gas flows to “across the continent,” MUFG analysts said, warning that an “immediate cessation” of Russian flows to northwestern Europe could raise TTF prices north by 200 euros per megawatt hour “for an extended period”.
