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Energy prices soar in response to Russia’s invasion on Ukraine

March 2, 2022

1 mins read

On the 24th of February 2022, Russia launched a full-scale military invasion of Ukraine, the most significant attack on a European state since World War Two. The invasion triggered a peak in energy prices across Europe due to concerns of supply disruptions. On the day of the invasion, crude oil prices soared to USD 95.4/bbl. The price of European natural gas also rose significantly amid high market uncertainty due to the heavy reliance on natural gas from Russia.

Robust demand and a sustained period of tight supply have been supporting the crude oil price in recent months, and the Russia-Ukraine escalation has only worsened the situation, as Russia is one of the top oil producers globally. Brent crude oil prices reached USD 101.1/barrel for the first time in over seven years on the 1st of March 2022 as a result of these escalations.

The price of EU ICE natural gas peaked on 24th February at GBP 318.5/100 Therm, up 48% day-on-day (d-o-d), and 717% year-on-year (y-o-y). The monthly price in February also rose, up 5% month-on-month (m-o-m), and up 374% y-o-y, reaching GBP 193.2/100 Therm. Concerns over supply shortages combined with robust demand drove prices higher in the last week of February 2022. However, in response to the invasion, the EU is due to release a strategy, aiming for long-term energy independence from Russia. This is expected to be a permanent, long-term plan which could relieve upward pressure on prices if implemented successfully.

Western countries are responding by imposing various sanctions, with the aim of targeting Russia's economy and financial institutions. This is impacting various export markets and is adding additional upward pressure on energy prices. Natural gas and crude oil prices are expected to remain firm until a long-term solution can be reached.

Alice Witchalls
Alice Witchalls

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