Oil prices could drop by $2 barrel (£1.30/Bbl), according to npower’s daily market report.
Tim Carter from npower’s optimisation desk said the potential drop is due to the Russian jet which was shot down yesterday as it raises “geopolitical tensions after a period of very little risk being priced into oil contracts”.
It is currently trading at $45.32 a barrel (£30/Bbl).
Mr Carter added: “Turkey is a huge importer of Russian gas so whilst there is probably too much at stake for either sides to consider halting supplies, it won’t do any favours to future relations.”
He said there is also a planned LNG pipeline – which connects to Russia – that was intended to reduce the dependence on Ukrainian transit but it has already had its proposed capacity “cut by 50% because of souring relations”.
Gazprom has cut off supplies to Ukraine today as its prepayment credit has run out.
The gas system is “perfectly balanced” this morning as demand has decreased by 20mcm more since yesterday due to temperatures picking up.
Flows from Norway have increased to near capacity as one of the two outages from yesterday has been resolved. The other outage is ongoing but the production impact is limited.
Imports from the Dutch Balgzand Bacton Line are perfectly offset by the UK’s Interconnector exports which have picked up today.
Power margins are comfortably more than 9GW today with good wind generation although the imports through the French interconnector remain at zero.