Soaring natural gas prices could weaken EU economy, Saxo Bank warns

The rise of natural gas prices could hurt the economic competitiveness of the European Union on a global scale, Ole Hansen, head of commodity strategy at Saxo Bank, told RIA Novosti.

European gas prices have been hitting record highs lately due to low storage volumes and the fast-approaching winter, as well as low supplies from Russia and uncertainty about the Nord Stream 2 gas pipeline.

Russia’s Gazprom said earlier it was ready to begin gas deliveries to Europe once the new pipeline obtains the required EU certification. But that process could take months due to squabbling among European countries about approving more imports from Russia.

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The certification delay sent European prices to a multi-year high of almost $970 per 1,000 cubic meters on Wednesday.

According to Hansen, the surge in prices could lead to power outages in the EU this winter.

“If the price growth is not pegged down in the near future, then there’s a risk of a harsh winter with power outages and a decrease in the competitiveness of energy-intensive industries, which are under pressure from a sharp rise in gas and electricity prices,” he said. The expert added that the energy-intensive industries, which are located mainly in Germany and France, will suffer the most.

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