European fuel costs may nearly triple this winter and stay elevated until next summer, Goldman Sachs predicts, potentially impacting households and benefiting Vladimir Putin’s attempts to finance his Ukraine conflict.
Wholesale fuel prices might surpass €100 per megawatt hour in the latter half of the year, almost triple the current levels of around €36.
Despite post-winter gas stocks in Europe being over 50% full and near record highs for this period, Goldman Sachs foresees a resurgence in European consumption and global liquefied natural gas (LNG) demand in the second half of 2023, pushing average prices above €90 per megawatt hour.
Analysts cautioned investors that even if industrial demand remains weak this summer, it does not guarantee sufficient storage throughout the winter season, as there is limited capacity to store gas before the heating season commences.
Experts contend that the current low prices in Europe have diminished the incentive for households to reduce gas consumption, which could contribute to the rebound in demand.
Elevated gas prices would benefit Russia, which, according to EU data, provided almost 25% of the EU’s gas imports from January to November 2022.
