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Natural gas prices in Europe surged after Russia said it may cut off supplies via Ukraine, the last route still delivering the fuel to western Europe.

Benchmark futures surged as much as 12%, jumping for a second day. The warning ratchets up the energy conflict with Europe, coming just after major leaks were reported on the Nord Stream pipelines that European authorities are calling a act of sabotage. The situation heightens concerns over shortages with the heating season just days ahead, countering efforts by nations to quickly fill up storages and curb consumption.    

Russia’s Gazprom PJSC (OTC:OGZPY) warned Tuesday that flows through Ukraine were at risk because of a legal spat. If these are halted, western Europe would be cut off, leaving just the TurkStream pipeline sending gas to Turkey, and some south and southeastern European countries. Supply via Ukraine were stable on Wednesday, but at the reduced levels seen since the war.  

The gas market has been roiled this week after nerves over shortages and blackouts had eased over the previous few days, that had sent gas prices tumbling from their August peaks. But risks have returned after the powerful underwater explosions in the Nord Stream pipeline left massive streaks of gas bubbling in the Baltic Sea. It means that the link, which has been shut over the past month, won’t bring any fuel to Europe for a long time.

Dutch front-month gas, the European benchmark, rose 11% to 206 euros per megawatt-hour at 8:47 a.m. in Amsterdam. Price increased 7.1% on Tuesday.  

Tensions also rose as Russia moved to annex a large chunk of Ukrainian territory after it declared victories in hastily organized referendums it held in the territories currently occupied by its forces and prepared to absorb them within days..

Putin Raises Gas Pressure as He Moves to Annex Ukraine Lands 

The worsening of the energy crisis increases Europe’s dependence on liquefied natural gas and leaves it more exposed to any disruptions in US supplies. Hurricane Ian has led to some production in the Gulf of Mexico being shut, raising concerns that this source of supply could also be limited.

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