Russia: Gradually shuts down the gas pipeline in Europe and sells it in China at a higher price.

The Fuel Crisis is creating inflationary trends and will gradually lead to inaccuracies and shortages of staple foods.

Although Russia would never admit it, Vladimir Putin Putin is slowly but surely tightening Europe's energy taps.

On Friday, European gas (Dutch TTF) briefly jumped to a record price of 100 euros before falling as China intensified its global struggle for energy supply.

China is ordering top energy companies to do so "at all costs," a move that threatens to push prices to unprecedented levels. At the same time, flows to Germany via a major Russian pipeline have collapsed.

Dutch gas contracts rose to 100 euros per megawatt-hour before falling 0.7% to 97 euros. Prices fluctuated between profits and losses as traders weighed the possibilities of limiting demand as more factories closed or reduced production.

Europe is trying to secure enough gas and coal before winter, with rising prices forcing some industrial giants, from fertilizer makers CF Industries at Yara International ASA to chemical giant BASF SE, to shut down plants or reduce production.

As Bloomberg energy commentator Javier Blas says, "Europe gas prices are (and have been for several weeks) incomplete demand-disaster. "The market is trying to force industrial consumption to keep gas for the rest of the (largely price inelastic) economy." Translation: Millions of people will end up without heating in the winter.

Unfortunately for Europe, no matter how high the gas price is, it is not as if someone can magically turn the switch and release the supply. 

Currently, European storage is just under 75%, the lowest level for this time of year in more than a decade, and they will be even lower: Stock withdrawals usually start by the end of the month, depending on the weather. 

So far, temperatures in northwestern Europe are forecast to be well within seasonal levels in October.

Meanwhile, reminding Europe who is at least responsible for winter heating, as the fuel flows from Europe's top supplier, Russia, to Germany's Mall now via the Yamal-Europe main pipeline, its volume sank by 77% on Thursday, just at the beginning of the heating season. As a result, at an auction on Thursday, no extra pipeline capacity was booked for fuel delivery at the Mall compressor station the next day.

According to the data, the natural flows through the Yamal-Europe pipeline, which crosses Poland, decreased in the morning to 5,313 megawatt-hours from 22,705 megawatt-hours on Thursday night entrance point to Mallnow. 

Pipeline supplies have fluctuated in recent weeks but have mainly been declining. 

Exports via the pipeline fell in August following a fire at Gazprom's plant.

The flows decreased as Gazprom closed only one-third of the gas transit capacity offered for October via the Yamal-Europe pipeline without any additional transit through Ukraine.

The energy giant himself declined to comment. 

He has repeatedly stated that he was supplying oil with natural gas in full compliance with existing contracts and said that additional supplies could be provided as soon as the newly built Nord Stream 2 gas pipeline was launched.

"Gas can go as high as needed to reduce demand," said Andreas Gandolfo, head of the European power group at BloombergNEF. "For some European industries, gas has become very expensive. "For some, including us, who have gas heating in the house, it can probably go much higher before a decision is made to turn it off."

According to Bloomberg, dealing with more industrial holidays in Europe also risks stopping the rally in European coal futures contracts. 

Some companies that reduce production or close factories are energy-consuming and use coal to cover their emissions.

The slowdown could lead them to sell their rights, said Trevor Sikorski, head of gas and energy transitions at London-based Energy Aspect Consultants.

To avoid widespread unrest, governments are struggling to respond to the crisis, with many countries taking steps to protect their voters from the worst effects of rising prices. For example, France will block any new increase in regulated gas tariffs and cut electricity taxes, Prime Minister Jean Castex told TF1 on Thursday, September 30, 2021.

"The volatile trading already shows that no one knows how high the cost of gas will be anymore, but we are certainly in a wild phase," said Niek van Kouteren, a senior trader at PZEM, a Dutch energy company. "The question is: Where will there be a disaster? "If you see governments intervening and subsidizing gas prices, as France announced yesterday, there is no incentive to reduce demand."

Meanwhile, Europe's energy crisis is hitting Asia hard, with liquefied natural gas rising to a record $ 34.47 a mmBtus on Thursday. The cost in Asia and Europe is about $ 190 a barrel, equivalent to crude oil.

Winter is approaching with "wild moods."

This article is for informational purposes only and does not replace specialized consulting services with professional experts.