London Daily

Focus on the big picture.
Monday, Sep 01, 2025

Spike in gas prices threatens big troubles for European economies

Spike in gas prices threatens big troubles for European economies

There are concerns that buyers, particularly big industrial users and household energy suppliers, become short of the commodity further down the line because they are delaying purchasing now in the hope of price reductions in the near term.
Wholesale gas prices are back to trading at close to a five-month high.

The price of British gas for immediate delivery is off 2.5% this morning but on Monday traded as high as 503p a therm - a level last seen in the immediate aftermath of Vladimir Putin's invasion of Ukraine.

Similarly, day-ahead prices are off by nearly 2% today, but on Monday traded as high as 505p a therm which, again, is a level not seen since early March.

The immediate trigger for Monday's surge was news late last Friday night that Russia is to suspend supplies of natural gas to Europe via the Nord Stream 1 pipeline for three days at the end of the month for what it described as maintenance purposes.

No one really believes that, given Moscow's increased willingness to weaponise gas supplies in response to European sanctions against it, but the impact is the same.

The concern is that, after the three-day maintenance period is over, Russia will not resume supplies.

The development comes at a time when European countries are scrambling to fill up their gas storage facilities ahead of the winter in anticipation of a possible complete cut-off of Russian gas, but also at a time when, due to the recent heatwave, heavier use of air conditioning systems has pushed up energy demand across Europe.

That scramble for gas means European countries are now bidding more aggressively for cargoes of liquified natural gas that might previously have been bought by countries, like the UK, which only bought very small quantities of gas from Russia.

Adding to the tightness in supplies is the fact that Gassco, the Norwegian gas pipeline operator, has been reducing supplies in recent days.

The expectation is that prices will remain at elevated levels for some time - although it is worth noting that gas consumption in continental Europe has been unusually low this summer as big industrial users, such as the German chemicals sector, have not been using as much gas as they were this time last year.

It seems likely that such demand as there has been, then, has been due to European countries filling their gas storage facilities.

The good news is that Germany, the biggest consumer, is making unexpectedly good progress in filling its facilities and is currently in line to hit the targets it has set itself for this winter.

Germany has also succeeded in reducing its gas use quite significantly in recent months - down by nearly one-third since the spring - by reopening coal-fired power stations.

It is also worth bearing in mind that, just because the price of wholesale gas is currently at elevated levels, it does not follow that customers are buying at these prices.

That is certainly the anecdotal evidence from energy markets.

This raises the concern that gas buyers, particularly big industrial users and household energy suppliers, become short of the commodity further down the line because they are delaying buying now in the hope of price reductions in the near term.

That could spell big problems for European economies next year.

In the meantime, proof came today that Germany in particular is already hurting, with "flash" purchasing managers index survey data for August suggesting that Europe's biggest and most important economy is contracting.

While the UK is now expected to enter recession later this year, there is a growing body of evidence that Germany is already in recession, which will have a knock-on effect across the continent - including the UK.
Newsletter

Related Articles

0:00
0:00
Close
Chinese and Indian Leaders Pursue Amity Amid Global Shifts
European Union Plans for Ukraine Deployment
ECB Warns Against Inflation Complacency
Concerns Over North Cyprus Casino Development
Shipping Companies Look Beyond Chinese Finance
Rural Exodus Fueling European Wildfires
China Hosts Major Security Meeting
Chinese Police Successfully Recover Family's Savings from Livestream Purchases
Germany Marks a Decade Since Migrant Wave with Divisions, Success Stories, and Political Shifts
Liverpool Defeat Arsenal 1–0 with Szoboszlai Free-Kick to Stay Top of Premier League
Prince Harry and King Charles to Meet in First Reunion After 20 Months
Chinese Stock Market Rally Fueled by Domestic Investors
Israeli Airstrike in Yemen Kills Houthi Prime Minister
Ukrainian Nationalist Politician Andriy Parubiy Assassinated in Lviv
Corporate America Cuts Middle Management as Bosses Take On Triple the Workload
Parents Sue OpenAI After Teen’s Death, Alleging ChatGPT Encouraged Suicide
Amazon Faces Lawsuit Over 'Buy' Label on Digital Streaming Content
Federal Reserve Independence Questioned Amid Trump’s Push to Reshape Central Bank
British Politics Faces Tumultuous Autumn After Summer of Rebellions and Rising Farage Momentum
US Appeals Court Rules Against Most Trump-Era Tariffs
UK Sought Broad Access to Apple Users’ Data, Court Filing Reveals
UK Bank Shares Dive Over Potential Tax on Sector
Germany’s Auto Industry Sheds 51,500 Jobs in First Half of 2025 Amid Deepening Crisis
Bruce Willis Relocated Due to Advanced Dementia
French and Korean Nuclear Majors Clash As EU Launches Foreign Subsidy Probe
EU Stands Firm on Digital Rules as Trump Warns of Retaliation
Getting Ready for the 3rd Time in Its History, Germany Approves Voluntary Military Service for Teenagers
Argentine President Javier Milei Evacuated After Stones Thrown During Campaign Event
Denmark Confronts U.S. Diplomat Over Covert Trump-Linked Influence in Greenland
Starmer Should Back Away from ECHR, Says Jack Straw
Trump Demands RICO Charges Against George Soros and Son for Funding Violent Protests
Taylor Swift Announces Engagement to NFL Star Travis Kelce
France May Need IMF Bailout, Warns Finance Minister
Chinese AI Chipmaker Cambricon Posts Record Profit as Beijing Pushes Pivot from Nvidia
After the Shock of Defeat, Iranians Yearn for Change
Ukraine Finally Allows Young Men Aged Eighteen to Twenty-Two to Leave the Country
The Porn Remains, Privacy Disappears: How Britain Broke the Internet in Ten Days
YouTube Altered Content by Artificial Intelligence – Without Permission
Welcome to The Definition of Insanity: Germany Edition
Just a reminder, this is Michael Jackson's daughter, Paris.
Spotify’s Strange Move: The Feature Nobody Asked For – Returns
Manhunt in Australia: Armed Anti-Government Suspect Kills Police Officers Sent to Arrest Him
China Launches World’s Most Powerful Neutrino Detector
How Beijing-Linked Networks Shape Elections in New York City
Ukrainian Refugee Iryna Zarutska Fled War To US, Stabbed To Death
Elon Musk Sues Apple and OpenAI Over Alleged App Store Monopoly
2 Australian Police Shot Dead In Encounter In Rural Victoria State
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
×