Gas prices in Europe have risen again following disruptions to LNG supply chains linked to tensions in the Middle East.
This comes as the European Union enters the final phase of its plan to phase out Russian gas. The scale of the physical disruption is limited when compared with the loss of Russian pipeline flows in 2021 and 2022, yet the price response has been disproportionately large.
This contrast points to a change in how risk is transmitted in the European gas system. In moving away from Russian gas, the EU has reduced exposure to physical supply interruption, but it has not removed exposure to price shocks.
