European gas will be historically expensive into 2025

Significance The prospective end of Russian natural gas supply by pipeline to Europe via Ukraine will remove yet another gas supply source to Europe, with Austria and Czechia worst affected, raising the stakes if any other supply source is disrupted. Impacts High natural gas prices will continue to weigh on the competitiveness of Europe’s industry, particularly compared to the United States. Any resurgence in natural gas prices could lead to slower ECB monetary policy easing than otherwise, which may dampen spending in Europe. Austria and Slovakia will incur higher gas import costs as they will have to import more LNG, which is more expensive than pipeline gas. When the pipeline closes, Russia will lose about USD4.0-4.5bn in annual gas export revenues, and Ukraine will lose USD1bn in transit fees.