Gas prices in Europe have risen again following disruptions to LNG supply chains linked to tensions in the Middle East.

This comes as the European Union enters the final phase of its plan to phase out Russian gas. The scale of the physical disruption is limited when compared with the loss of Russian pipeline flows in 2021 and 2022, yet the price response has been disproportionately large.

This contrast points to a change in how risk is transmitted in the European gas system. In moving away from Russian gas, the EU has reduced exposure to physical supply interruption, but it has not removed exposure to price shocks.

The disruption of Russian gas supplies in 2021 and 2022 exposed risks associated with dependence on a single supplier and on inflexible pipeline infrastructure.

The EU response set out first in the REPowerEU Plan and then developed further in the 2025 roadmap, rests on two pillars: lower gas demand and supply diversification – principally through pivoting toward LNG. This has strengthened the resilience of physical gas supply, but arguably left the EU more exposed to price volatility in global markets.

Russian gas imports declined sharply after the 2022 energy crisis, with Russia’s share of EU gas demand falling from 39% in 2021 to 12% in 2023. In 2024, the EU still imported around 52 billion cubic metres of Russian gas, which reflects both the scale of the transformation and the difficulty of fully eliminating such a large supplier. As a result, the framework for completing the phaseout has become more stringent,........

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