(Bloomberg) -- A continuation of Russian gas flows through Ukraine would only have a small impact on European fuel prices this winter, according to Bernstein analysts.
While the researchers don’t see a transit deal extending beyond the end of the year, an unexpected continuation would only result in about 5 billion cubic meters of extra supply until the end of the heating season. That’s less than 2024’s average monthly imports so far, analysts including Irene Himona wrote in a note.
European benchmark futures would only be about 1.4% lower than their current levels during the remaining winter months in that scenario, they said.
The region’s gas prices have been volatile this year as traders sought to hedge against a plethora of risks, including the end of the Russia-Ukraine gas transit agreement. But it’s still managed to build up ample stockpiles and diversify its fuel sources, putting it on relatively stable footing for the winter.
A sudden increase in demand due to cold weather could still impact Europe’s balance of supplies. A continuation of flows would help keep the market “more balanced as opposed to a tight market without it this winter,” the analysts wrote.
If the contract expires, it would more or less halve gas imports from Russia next year from current volumes.
Before the war, Gazprom supplied Europe with more than a third of its gas, but the region has since moved to diversify supplies. The European Union now relies more on other sources, including Norway, North Africa and Azerbaijan, as well as LNG from the global market.
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