Reasons behind the 2022 energy price increases and prospects for next year

Summary:

Throughout 2022, the weaponisation of natural gas supplies by Russia led to concerns regarding the security of natural gas supply in Europe. This column reviews the reasons behind the increases in energy prices and prospects for 2023–24. Decisive EU policy and market rebalancing helped reduce concerns about shortages, bringing prices back to physical fundamentals. Similar spikes to those experienced in the summer of 2022 are less probable in the winter of 2023–24. Managing demand, increasing diversification, and renewing focus on the security of supply remain necessary.