Oil prices fell sharply on Wednesday. Those of European gas, much more volatile, also melted. The main reason: investors believe that the possibility of a European embargo on Russian hydrocarbons has diminished despite the continued fighting in Ukraine.
Around 4:40 p.m. GMT (5:40 p.m. in Belgium), a barrel of Brent from the North Sea for delivery in May lost 6.81% to 119.26 dollars. The barrel of West Texas Intermediate (WTI) for delivery in April fell 5.71% to 116.64 dollars.
The publication of a sharper drop than expected in commercial oil reserves in the United States did not slow down the decline in prices, in a market focused on Ukraine.
While new sanctions have been put in place by the European Union against Russia, the EU has so far ruled out an embargo on Russian hydrocarbons, an option adopted by the United States, or a fixed date for the end of imports oil companies, like the UK.
Gas prices fall
The benchmark for the European natural gas market, the Dutch TTF, fell 29% to 152.50 euros per megawatt hour. The extreme volatility of the market no longer surprised investors: the price of gas has lost 56% since its peak reached on Monday at 345 megawatt hours, but remains up 116% since the start of the year.
The market had bet on the possibility that the Russian offer would disappear completely
Start of the week, “the market had bet on the possibility that the Russian supply would disappear completely, either with a (European) embargo or a halt to exports from the Nord Stream 1 gas pipeline by Russia. These scenarios are less likely, so the risk premium decreases a bit“, explained to AFP Richard Gorry, analyst at JBC Energy.Russian gas exports continue unabated“, said Sindre Knutsson, analyst at Rystad Energy.
Conversely, a halt in Russian oil and gas exports would cause prices to soar, warns his cabinet, which estimates that oil prices could reach $240 in this worst-case scenario.
The risk remains
And a reversal of the situation remains possible: “the risk of serious trade disruptions is high as long as the conflict continues“, Barclays analysts warn in a note.