Russia notifies EU of hiking energy prices

The European Union faces soaring energy prices in the wake of sanctions imposed against Moscow over events in Ukraine, Interfax quoted a Russian foreign ministry official as saying on Saturday.

Nikolai Kobrinets said Russia was a reliable supplier of energy, but was ready for a tough confrontation in the sector if necessary. He did not provide details of what that confrontation might entail.

He said the situation on global energy markets would lead to the EU paying at least three times more for oil, gas and electricity.

"I believe the European Union would not benefit from this - we have more durable supplies and stronger nerves," Kobrinets told Interfax.

Kobrinets' remarks come after the European Commission announced March 11 proposals to "phase out" Russian fossil fuels by 2027, after leaders met in Versailles to coordinate further responses to Russia's invasion of Ukraine. The EC had already outlined a plan to reduce EU demand for Russian gas by two-thirds by the end of 2022.

French President Emmanuel Macron also said "nothing is off the table" when it comes to potential new measures against Moscow, after being asked whether the EU could consider a more immediate ban on Russian oil and gas imports, or blocking Gazprombank from the SWIFT banking system. The EU's move comes after the US and UK announced bans and phase-outs on the import of Russian oil and products, escalating the scale of sanctions targeting the Kremlin.

Day-ahead gas on the benchmark Dutch TTF hub was priced at Eur212/MWh on March 7, an all-time high and 230% higher than at the start of 2022, according to Platts price assessments by S&P Global Commodity Insights.

European storage sites were filled to just 77% of capacity last summer, and storage facilities were just 26% full as of March 8, according to data from Gas Infrastructure Europe.

"Global gas prices temporarily dislocated from day to day fundamentals to be almost entirely driven by the uncertainty surrounding future Russian supply," said James Huckstepp, head of EMEA Gas Analytics at S&P Global Commodity Insights. "Russian imports are at risk of further Western sanctions, retaliatory actions by Moscow or by physical disruption to Ukrainian transit infrastructure, but the gas is so far continuing to flow to Europe as normal."