Wholesale gas prices dropped sharply in both the UK and Europe as Russian president Vladimir Putin ordered more gas to be pumped into Europe.
Prices in Europe dropped by 12% following the Russian president’s directive, while UK prices fell 9% to 198.70p per therm.
Soaring power prices have been a major concern across the continent and have been the result of a freakish combination of low stocks due to Covid, strong Asia demand and limited supplies from Russia.
Earlier this month the UK wholesale price of gas soared to a new all-time high of 400p a therm, having started 2021 at 60p.
British Gas’s owner Centrica recently predicted that the wholesale energy price spikes that have caused more than a dozen suppliers to collapse will add GBP100 to annual UK energy bills.
Chancellor Rishi Sunak warned yesterday about the impact of rising inflation, with the OBR forecasting inflation would jump to an average of 4% in 2022 in part due to the rise in fuel costs.
While the UK imports most of its gas from Norway, Europe also supplies it with a significant amount of its needs.
According to Bloomberg, the move by Russia reflects concerns that if prices stay too high it will accelerate the permanent move towards renewables and other non-fossil fuel alternatives.
Ideally, Russia would like to see prices fall by about 60%, the newswire said quoting Russian sources.
More gas being pumped in Norway and lower coal prices in China are also pushing the gas price down, said the report.