On Tuesday, the CEO of commodity trader Trafigura Jeremy Weir warned of Europe’s power outages in the upcoming winter on the back of low gas reserves and high oil prices.
"We haven't got enough gas at the moment quite frankly, we're not storing for the winter period. So hence there's a real concern that there's a potential if we have a cold winter that we could have rolling blackouts in Europe," Weir said.
Lacking gas supply has driven prices to record highs in 2021. However, some countries’ responses, including price caps and subsidies, might not be enough, according to Weir.
Russia has been accused by some European lawmakers of restricting supply to Europe in order to pressure Germany to quicken the authorization of the Nord Stream 2 pipeline. Moscow has denied the accusation.
Russian gas giant Gazprom, which is Europe’s key gas exporter, has started refiling its European storage facilities last week after fulfilling their own domestic needs. However, on Monday, the company booked a lower pipeline capacity for December.
The scarcity of gas has driven a run for oil, which has also driven prices soaring by 60% since the beginning of 2021.
Weir cited the pressures on companies to shift to cleaner energy as a factor dragging up oil prices even higher. Other than that, the oil industry has been lacking investments and it would need some more time to expand them.
At the moment, oil prices are seeing a market structure of backwardation which signaled tight prompt supplies as the Organization of the Petroleum Exporting Countries (OPEC) and their allies continue to restrict production.
Weir estimated that there is a possibility that oil could hit USD100 plus/barrel.
