Gas prices jumped after Russia threatened Germany and other Central European countries earlier this week to cut gas supplies further.
European gas prices rose nearly 2% after Russia invaded Ukraine, trading near record highs.
Critics accuse the Russian government of using gas as a political weapon. Russia is cutting off flow through Germany’s Nord Stream 1 pipeline, operating at less than a fifth of its standard capacity.
Before the Ukraine War, Germany imported more than half its gas from Russia; Most of this came through Nord Stream 1, the remainder coming from land-based pipelines.
By June, this had come down to just a quarter.
Russian energy firm Gazprom tried to justify the latest cuts by saying there was a need to allow maintenance work on the turbines. However, the German government said there was no technical reason to limit supplies.
Ukraine has accused Moscow of waging a “gas war” against Europe and cutting off supplies to spread “terror” to the people.
Meanwhile, Poland has said it will be utterly independent of Russian gas by the end of the year.
The UK would not be directly impacted by gas supply disruption, as it imports less than 5% of its gas from Russia. However, it would be affected by prices rising in the global markets as demand in Europe increases.
European wholesale gas prices closed at €204.85 (£172.08) per megawatt hour – the third highest price on record. The all-time high was achieved on 8 March when prices closed at €210.50 (£176.76) per megawatt hour, according to analysts Icis.
However, last year’s wholesale gas price in Europe was just above €37 (£31.08) per megawatt hour.
UK gas prices rose 7% on Wednesday, which is now more than six times higher than a year ago. However, it is still well below the peak seen in the aftermath of Russia’s invasion of Ukraine.
BFY said its forecast reflected the increase in wholesale prices over the past few weeks, with the ongoing tensions with Russia sparking concerns over winter supplies.
The latest flow reduction puts pressure on EU countries to further reduce their dependence on Russian gas and will likely make it more difficult for them to replenish their gas supplies ahead of winter.
Since the invasion of Ukraine, European leaders have discussed reducing its dependence on Russian fossil fuels.
