UK wholesale gas prices for the month ahead rose by 17 percent to more than 375p a therm. It’s four times higher than they were a year ago while at the same time European benchmark prices rose by a fifth.
The increase in wholesale gas prices will heap yet more misery on consumers.
Energy bills are expected to surge to £3,200 a year from October.
They are also expected to rise again in January if wholesale prices remain high.
On Monday, Russian energy firm Gazprom said it would limit supplies further gas volumes through the Nord Stream 1 pipeline to Germany from today.
They will only be supplying a fifth of normal capacity.
The pro-Kremlin company has blamed maintenance issues in relation to a turbine that is stuck in Germany due to sanctions.
However, the move has widely been portrayed as Russia “weaponizing” gas by deliberately limiting Europeans in retaliation for western backed sanctions.
It comes as EU leaders have reached an agreement for member states to voluntarily cut gas usage by 15 percent from August to March.
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Tom Marzec-Manser, head of gas analytics at Icis, the price reporting agency, said that if Nord Stream 1 supplies were limited to present levels for a protracted period, it would “likely limit Europe’s ability to inject adequate volumes of gas into storage, which could have consequences on winter supply”.
Analysts at Redburn said Russia was “now firmly putting the squeeze on European energy supply”.
They said: “Alarmingly, it looks like further pretexts to cut supply are potentially already being developed.
“This is arguably now blatant politicisation of gas flows.
“Gas prices, and exposed equities, have benefited accordingly as the market worries about winter and the reliability of Russian supply.”
Karolina Siemieniuk, at Rystad Energy, said that Russian claims that supplies would not be halted was not “reassuring”.
She said: “Even though Kremlin press secretary Dmitry Peskov stated that a complete halt of gas supply to Europe is not planned, the statement is not overly reassuring and right now the situation appears a never-ending game with Russia calling the shots.”