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Daily Focus: Will Europe ditch Russian gas?

News. A discussion has begun in the Eurozone about imposing sanctions on Russia’s energy sector.

Comment.  According to some media reports, the EU could impose sanctions against Russia. The sanctions package itself would include, oddly enough, a restriction on the import of energy resources from Russia, including gas. Germany is opposed to including restrictions on energy imports from Russia in the sanctions package, so the final decision, according to media reports, has not yet been made. Germany also categorically objects to the refusal to launch the Nord Stream 2 gas pipeline. Meanwhile, the Biden administration claims that it allegedly held talks with unnamed representatives of Qatar and some anonymous North African countries to increase LNG supplies to Europe. The TTF gas futures price has decreased slightly today, although it seems that the EU does not have much confidence in the US promises, since Qatar is unlikely to sell gas to Europe at a lower price than it could sell in Asia, and it would make more sense for Europe to abandon the absurd sanctions against Russia rather than buy expensive Qatar gas.

Market reaction. The TTF gas futures price is about $1,000/mcm.

Forecast. Gas prices in Europe could trade in the range of $900-$1,000/mcm over the next month.

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