Gas prices soar 26% after Russia keeps key pipeline closed

Gas prices have soared on concerns over energy supplies after Russia announced it would not reopen its main gas pipeline to Europe.

The Dutch month ahead wholesale gas price, a benchmark for Europe, was up as much as 26% on Monday, before falling back slightly.

The Nord Stream 1 pipeline had been due to reopen on Saturday after being shut for three days.

But Russia’s state-owned energy firm Gazprom said it had found a leak.

Europe has accused Russia of using gas supplies to blackmail European countries because of the Ukraine conflict, which Moscow denies.

 

Wholesale prices have been very volatile in recent weeks. They fell sharply last week when Germany announced that its gas storage facilities were filling up faster than expected.

 

Although the UK is not reliant on Nord Stream 1 for its gas, the Kremlin’s decision to squeeze supplies to Europe has driven up the overall cost of wholesale gas.

This has been behind the spike in the energy bill price cap for consumers in England, Wales and Scotland.

Tory leadership hopeful Liz Truss has promised to announce a plan to deal with high energy bills if she becomes prime minister. Her rival, Rishi Sunak, has said he will target further payments aimed at the poorest.

However, UK businesses are not protected by a price cap and, last week, the British Chambers of Commerce warned firms would “close their doors this winter” if they were not given support with soaring bills.

Energy expert Bill Farren-Price told the BBC’s Today programme that the “crunch moment” would come later in the year if demand is particularly high for gas and is going to exceed what can be imported.

He added that looking action on energy bills would be the top priority for the incoming prime minister.

A number of European governments have revealed plans to help businesses and consumers cope with surging energy costs. On Sunday, Germany announced a €65bn (£56.2bn) package which includes one-off payments to the most vulnerable and tax breaks to energy-intensive firms.

Over the weekend, Sweden and Finland also announced multi-billion pound packages to support energy companies.

Oil price cap

Moscow has denied using energy supplies as an economic weapon against Western countries supporting Ukraine.

It has blamed the sanctions for holding up routine maintenance of Nord Stream 1, but this is disputed by the European Union.

Gazprom made the announcement on Friday shortly after the G7 nations agreed to cap the price of Russian oil in support of Ukraine.

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