Gas prices are likely to remain double their normal value until 2025 and blackouts could roll out across Europe as the temperature drops, according to a report by investment bank Goldman Sachs.
Rising tensions between Russia and Ukraine are expected to push gas prices above the record highs set in December, while colder than average weather during the months of February and March could deplete end of winter inventories as gas is used for power generation.
The Goldman Sachs report warned the balance between supply and demand in northwestern Europe would remain tight, driving prices up to reach twice the ten-year-average.
“High energy prices seen in recent months are not necessarily a one-off,” warned Goldman Sachs.
Wholesale gas prices jumped in the second half of 2021 against a backdrop of a global shortage of supplies. Demand has bounced back with the COVID-19 pandemic easing off, and European gas prices soared to record highs in mid-December.
Prices have since fallen back from these levels, thanks to shipments of liquefied natural gas reaching Europe.
Goldman Sachs analysts warned it was too early to declare the energy crisis over, and concerns could continue not only through the coming summer but until 2025.