Rising gas prices in recent weeks have brought back some bad memories for European energy traders — and governments.

Recollections are fresh of the problems that hit energy markets following Russia's invasion of Ukraine in 2022. As the continent scrambled to end its dependence on Russian gas, prices soared.

Apart from fueling already rampant inflation, it led to concerns around possible blackouts. Persistently high prices also led to problems for energy-intensive industries, leading to closures and job losses.

Europe ultimately made it through the last two winters, largely thanks to milder-than-expected weather enabling it to keep energy usage low. However, a cold start to November has contributed to a fresh surge in natural gas prices.

Prices spiked in November, hitting almost €49 ($51.6) per megawatt-hour (MWh) on November 21, the highest price in over a year.

Are fears justified?

The cold weather has led to more heating being used, and combined with low wind speeds in northern Europe and the resulting fall in renewable supply, gas is in higher demand.

However, prices remain way below the highs seen during 2022, particularly as overall demand for gas has fallen since then. The shock can also be partly explained by the fact that throughout 2024, prices have been far lower than at any time since the war began.

"Prices have risen by approximately 40% since mid-September," Petras Katinas, an energy analyst at the Centre for Research on Energy and Clean Air (CREA) , told DW. "So it's a pretty huge jump all of a sudden."

The prospect of a colder winter has led to fears that inventories — fully stocked until recently — could be depleted and fuel a cyclical surge in prices.

However, Katinas says Russia's grip on the European market has weakened greatly since 2022 and that talk of a "crisis" is overblown. "I wouldn't call it crisis, especially if we compare what actually happened in 2022 and 2023," he said. "The majority of the EU member states do not have huge dependency on Russian gas anymore."

But what about Russian gas?

But questions around Russian gas continue to influence the overall picture.

Russia is far from the behemoth it once was in terms of EU gas supply. The share of Russian pipeline gas imported by member states fell from 40% of the total in 2021, to about 9% in 2023. However, according to recent CREA data, a rise in Russian liquefied natural gas (LNG) into the bloc means it still accounts for 18% of the EU's total gas imports, an increase of almost 5% from 2023.

Ultimately, Russian pipeline gas deliveries to the bloc appear to be coming to the end. Austria, one of the last European countries still receiving pipeline gas from Russia, finally stopped receiving the hydrocarbon after a legal dispute with Gazprom, the state-owned Russian gas company.

While Slovakia and Hungary still receive Russian pipeline gas, all indications suggest the arrangement will run out at the end of 2024. The five-year gas transit deal involving Gazprom and Ukrainian state company Naftogaz for the transit of Russian gas across Ukrainian territory expires at the end of the year and Kyiv says it will not renew it.

Although the TurkStream pipeline will still supply Hungary, the end of flows via Ukraine will put pressure on central European countries to find an alternative supply.

Borys Dodonov, head of the Center for Energy and Climate Studies at the Kyiv School of Economics, expects the gas transit deal to end because, "Ukraine has no economic rationale to renew this contract."

In an interview with DW, Dodonov pointed to the possibility of some kind of alternative deal being done instead. "We cannot exclude any hidden agreements, or corruption," he said, and added that the EU itself could lobby to keep the gas flowing in order to avoid potential shortages in countries such as Slovakia and Hungary.

Remarkably, despite everything that has happened in the last three years, the EU remains Russia's biggest customer for both pipeline gas and LNG. In October, the EU bought 49% of all Russia's LNG exports and 40% of all its pipeline gas exports.

Could LNG ultimately solve the problem?

Since Russian pipeline gas to Europe was largely cut off in 2022, LNG has become more important for both parties. Russian LNG volumes into the bloc have increased by close to 15%  so far this year.

Dodonov insists that Europe does not need any Russian gas to meet its energy needs, including LNG, due to new LNG capacity coming from the US. He expects incoming US President Donald Trump to increase LNG output and thinks Europe could be primed for a major gas trade deal with the country.

Ed Cox, head of global LNG at independent commodity data provider ICIS, notes that LNG now accounts for 34% of Europe's total gas share since the invasion in 2022, double what it was prior. The pivot to LNG means Europe is now more vulnerable to global price pressures. "Europe is more connected to fundamentals in a global market than ever before," he told DW, even though overall European demand for gas had fallen by around 20% from the pre-invasion period due to high prices, warmer-than-expected weather and increased renewable capacity.

Cox believes that in the event of a cold winter and an end to the Ukraine transit deal, Europe will still be able to meet its gas needs with LNG. However it will come at the risk of much higher prices as supply won't be dramatically increased in the short term. "Europe will get enough LNG if it needs it. But it might mean that European prices have to go higher to compete with Asian demand."

Higher prices for gas to replenish stocks after the winter, he added, would have a knock-on effect heading for the winter of 2025 and beyond. "It's not about whether we have enough LNG or gas, it's really about the price implications."

Edited by: Uwe Hessler