A cargo of Russian liquefied natural gas (LNG) is caught up in the latest U.S. sanctions aimed at Russian energy exports. This shipment, which left the Portovaya LNG export terminal in December, is currently stalled off the Iberian Peninsula. The Portovaya terminal, operated by Gazprom, is among the entities recently sanctioned. This includes 183 tankers from Russia’s so-called shadow fleet.
The new sanctions are considered the most aggressive by the Biden administration and are expected to negatively impact Russian energy exports. Experts predict that these sanctions will lead to higher prices for both crude oil and LNG, which could cause difficulties for major buyers in Asia and the European Union.
European Union officials have been working to prevent local buyers from purchasing Russian LNG. While last year saw record Russian LNG imports to Europe, the latest U.S. sanctions may help achieve their goal. Over the past month, European natural gas prices have surged from around 39 euros per megawatt-hour in mid-December to 45.44 euros per MWh.
With the Portovaya terminal now sanctioned, along with another LNG export terminal operated by Novatek, and the expiration of the gas transit deal with Ukraine, Europe is expected to lose its Russian gas supply. This will likely result in higher LNG prices from alternative sources, including the Middle East, the U.S., and possibly Australia.
At the same time, gas storage levels in the EU have fallen to just over 66%. With a peak demand season approaching, the region is facing less favorable conditions than the mild winters it experienced over the past two years.
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