European gas prices soared to the highest level this year following a report that Ukrainian troops seized the key gas-transit point of Sudzha, Bloomberg reported. Sudzha is the only remaining gas intake point for Russian pipeline gas going to Europe via Ukraine after the other major entry point, Sokhranovka, was put out of service in May 2022.
Benchmark futures jumped as much as 5.8% to €38.79 a megawatt-hour, surpassing the previous intraday high in early June. The unofficial Russian military blog Rybar said Ukrainian troops seized the gas intake point near the border town of Sudzha in Russia. The claim couldn’t be independently verified. Russia’s state-controlled Gazprom PJSC declined to comment, as did Ukraine’s defense ministry and general staff of the armed forces.
Traders have been on alert for disruptions at the transit point – a key remaining link carrying Russian pipeline gas to Europe – a as fighting intensifies on the border with Ukraine. Any halt in flows would likely cause a spike in prices, affecting consumers and industries as Europe continues to find its footing from an energy crisis caused by the war.
It’s unclear whether Gazprom will choose to continue sending flows through Sudzha if it has indeed been captured by Ukraine. Russian President Vladimir Putin accused Ukraine of a “large-scale provocation” by sending hundreds of troops into Russia’s Kursk region, the biggest assault on Russian territory since he ordered the 2022 invasion of its neighbor.
Austria and Slovakia are the primary remaining importers of Russian pipeline gas in Europe after Gazprom throttled deliveries to Germany and other countries two years ago. While those flows may stop when a transit deal expires at the end of this year, a sudden and earlier disruption could jolt the global gas market, intensifying global competition for liquefied natural gas cargoes.