Side Effects of High Russian Gas Prices and What Gazprom Can Do about It - IEA

The International Energy Agency (IEA) said on Tuesday (21 September) Russia could do more to help alleviate gas supply issues in Europe which have driven prices up to record highs over the past month.

The comments come after a group of European Parliament lawmakers last week asked the European Commission to investigate Gazprom's role in soaring European gas prices.

"The IEA believes that Russia could do more to increase gas availability to Europe and ensure storage is filled to adequate levels," it said in a statement.

Benchmark European gas prices have risen more than 250% this year, leading to higher power prices and a knock on effect on industries reliant on gas for their production such as fertilizer plants.

The sharp price has been caused by a number of factors, such as strong demand in Asia and both planned and unplanned infrastructure issues, but traders have said Russia's decision not to book capacity at auction on gas transit pipelines to Europe has made the issue worse.

"Based on the available information, Russia is fulfilling its long-term contracts with European counterparts - but its exports to Europe are down from their 2019 level," the IEA said.

"This is also an opportunity for Russia to underscore its credentials as a reliable supplier to the European market," it said.

Whatever the causes, the surge carries major market implications:

1/Growth

Analysts say it's too early to downgrade economic growth forecasts but a hit to economic activity looks inevitable.

Morgan Stanley reckons the impact in the United States, the world's biggest economy, should be small. While over a third of US energy consumption in 2020 was supplied by natural gas, users were predominantly industrial, it...