De-escalation in natural gas after the non-interruption of Russian flows to Europe

Gas prices in Europe are falling, as concerns are mounting that Russia would cut off supplies immediately, following Moscow’s announcements of a ruble payment obligation from “unfriendly countries” to import gas.

The price in Europe fell by 2.9% on Friday, “extinguishing” its previous profits, after the Kremlin announced that the payments covered by the new measure are those related to quantities delivered from today and which will be paid to at the end of April or in May.

Russian President Vladimir Putin’s demand for ruble payments has caused market turmoil in recent times. Comments by European officials are reassuring, based on the belief that the flows will not be affected by the new payment mechanism, but the German government notes that it is studying the decisions of the Russian leader in order to determine how it will react.

Russian energy giant Gazprom said, according to Bloomberg, that it has already started informing its customers about the new rules.

“Energy futures will continue to be guided by developments around the ruble payment case in the near future,” Inspired Energy said in a report.

Foreign buyers from countries “friendly” to Russia (countries that have imposed sanctions on it for invading Ukraine) will be forced to open new, special ruble accounts in Russia’s Gazprombank in order to make their payments through the gas, according to a decree of the President of Russia which was signed on Thursday.

The Dutch gas contract, a benchmark for the whole of continental Europe, fell by 2.9%, to 122.21 euros per megawatt hour at 13.24 Greek time, with the corresponding British contract falling by 2.5%.

Traders are also monitoring the weather, with low temperatures expected in Europe next week expected to boost demand for gas for heating use, according to a Maxar report.