Russia Keeps Gas Market on Edge With No Sign of Increasing Flows

Top supplier Gazprom PJSC again opted not to book any pipeline space for March to send gas to Germany via the key Yamal-Europe link, according to monthly auction results on Monday. Westbound supplies through that route have been halted since December. The company also didn’t buy extra transit capacity for its fuel through Ukraine.

The escalating tension risk worsening Europe’s existing energy crunch as Russian supplies have been curbed for months. Gazprom has said it meets the demand from its long-term European buyers in full and lower flows reflect lack of requests from clients. Still, this helped to push European prices for everything from gas to power and carbon emissions to records in December.

U.S. National Security Advisor Jake Sullivan told CNN on Sunday there’s “a distinct possibility that there will be major military action very soon.” Russia has repeatedly denied it plans to invade its neighbor.

Gazprom still has an option to use daily bookings, which it has used in the past. But the lack of longer-term certainty means that European prices will probably remain volatile, and benchmark European gas futures surged as much as 14% on Monday before the auctions.

Robust liquefied natural gas deliveries to the continent, as well as mild weather, brought some relief recently. However Europe will need much more gas to replenish its depleted inventories ahead of next winter.

There was some extra capacity booked on Monday for month-ahead supplies from Ukraine to Slovakia, a major transit route for Russian flows. A similar booking was made for January and February, but actual flows were far below allocated volumes.