The introduction of the European Union price cap mechanism for natural gas leads to the risk of disruption of supplies to the region and the intensification of the energy crisis, Bloomberg reported.
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The publication notes that the gas price cap mechanism agreed by EU countries on Monday, December 19, may partly prevent sharp fluctuations in the global market, but it could also leave Europe vulnerable to potential supply shortfalls and increased competition from the Asian region.
Citing a published report by Goldman Sachs Group analysts, Bloomberg reports that the price cap mechanism itself without a demand cap leads to the risk of gas supply shortages by artificially stimulating consumption. This could lead to a reduction in global supply in 2023 and, in the worst-case scenario, even force governments to impose a gas consumption cap. in addition, a price ceiling would create difficulties for European importers if they wish to significantly increase their liquefied natural gas (LNG) supply bids.
As the agency notes, LNG importers will opt for Asia if the prices there exceed the ceiling in Europe.
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