If you think energy prices are getting out of control in the U.S., just look at what they’re trading at in Europe.
The benchmark Dutch TTF natural gas contract shot up 47% to €283.43 per megawatt hour on Monday. That’s $522 per barrel of oil equivalent.
The lead Brent oil contract
as trading up over $4 to $122.60 per barrel.
The surge comes as the U.S. and Western allies debate whether to impose sanctions on Russian oil. Russia also could make its own moves unilaterally, though at the cost of cutting off the hard currency it can’t otherwise receive now after Western sanctions.
Russia was the source of 45% of the European Union’s natural-gas imports last year, according to the International Energy Agency.
While Europe appears to have enough gas in storage to make it through the summer, Europe would have to cut demand by as much as 15% to make it through the next winter in the event of a full cutoff of Russian supply, said Peter Williams, an analyst at Evercore.
That could come by maximizing summer storage at elevated prices, reducing natural gas demand through conservation and a changing utility mix, and subsidizing producers, he said.