The European carbon price jumped by almost €1 at the opening on Friday, tracking similar development in gas prices. Meanwhile, TTF front month traded briefly at €45,495/MWh,its highest level in three weeks and almost 6,2% higher compared to the previous settlement.

Both markets responded to social media videos showing a massive fire over Sudza in Russia’s Kursk region. Later on, according to Bloomberg, NASA satellites “indicated wide-scales fire covering the gas-station area and the surrounding territory.”

While Russian propaganda attributed the incident to a Ukrainian attack, claiming significant damage to a crucial pipeline, Ukraine is accusing Russia of sabotaging its own gas pipeline to frame Kyiv and disrupt the proposed energy ceasefire. 

The Sudzha Gas Station is a vital facility operated by Gazprom, previously used to export Russian gas to Europe via Ukraine. Up until this year, about 42 mcm passed through this crossing point every day. Another major distribution point, Sokhranovka, was closed soon after the war started, leaving Sudza the only transmission route for Russian gas deliveries to Europe. 

As if the gas supply situation wasn’t already challenging, according to Norwegian operator Gassco, Asgard and Troll are on an unplanned outage this morning due to a compressor failure, reducing flows by 10,3 mcm/day, adding further pressure on prices.

The price movements following this morning’s news are yet another indication of the increasing anxiety in Europe’s energy markets. Market reaction suggests “at least a partial resumption of flows had been factored by the market,” said Bloomberg Intelligence senior analyst Patricio Alvarez.